A chara, – There is widespread agreement with Sarah Carey (Opinion, July 16th) that a vibrant private sector is essential in order for poor countries to obtain the degree of economic activity necessary to develop. Historically neglected in anti-poverty strategies, they have a key role to play in tackling poverty through their innovation, efficiency and capacity. However, less attention is given to the distortion of that private sector by tax-dodging in developing countries.
Some unscrupulous businesses take advantage of weak international financial regulation and revenue collection capacity to dodge an estimated $160 billion in tax every year in poor countries. This figure dwarfs current aid flows.
But it is not just about lost revenue. Tax-dodging has a stultifying effect on the development of small domestic enterprises into medium size enterprises – the very sector that should ultimately be providing a country’s middle-class. This is because international tax-dodging is only open to large companies with cross-border trade, introducing a systematic bias in favour of large multinationals.
Christian Aid is engaging closely with representatives of the private sector who share a commitment to eradicating poverty in order to explore ways in which tax-dodging can be tackled. This can be done, for example, through greater transparency in the financial reporting of large companies.
Ultimately an efficient tax system will move developing countries away from a reliance on variable volumes of aid, to a more sustainable and predictable source of income. – Is mise,
SORLEY McCAUGHEY,
Advocacy and Policy Officer,
Christian Aid,
Clanwilliam Terrace,
Dublin 2