Campaigners are Calling for the World's Richest Countries to End Tax Havens

    23 May, 2013


    From VOA Learning English, this is the Economics Report.

    Demonstrators recently protested outside the British Treasury to call on the world's richest countries to end so called tax havens. These tax haven policies allow companies to move their profits to countries with lower taxes. An investigation found that this practice costs Africa alone $38 billion a year in lost taxes. Former U.N. Secretary General Kofi Annan led the investigation.

    The demonstrators at the Treasury called on Chancellor George Osborne to discuss the practice with finance ministers from other wealthy countries. Melanie Ward is spokesperson for the 'Enough For Everyone If' campaign.

    "I think a lot of people here in the U.K. and around the world are fed up with tax dodging. They are fed up with a system where the rich and powerful play by a different set of rules to everybody else."

    Ronen Palan is a professor at City University London. Professor Palan says tax havens and no-tax countries like Ireland are popular, because companies and wealthy individuals can save money.

    "These countries offer very low taxation, either to corporations or to individuals. And specifically they target non-residents."

    But critics of tax havens say big companies transfer profits out of the very countries on which they and their wealth depend.

    "Africa exported about $1 trillion of capital in the last 30 years whereas inward investment in terms of FDI [Foreign Direct Investment] or aid is about $300 billion.  So Africa is losing capital.  Africa, or sub-Saharan Africa, is actually funding development elsewhere."

    But charity ActionAid says the brewing company SABMiller uses a complex system of tax havens. It says this system moves profits out of the company's operations in developing countries like Ghana. SABMiller denies any tax abuses. It says in 2010 it paid about $250 million in corporate taxes in India and sub-Saharan Africa. ActionAid also accuses an Associated British Foods of using its subsidiary companies to reduce its taxes in Zambia by millions of dollars. Associated British Foods says the accusations are "incomplete at best and factually wrong in places."

    Mark Littlewood is Director General of the Institute for Economic Affairs in London. He argues that tax havens help the global economy by increasing investment.

    "This idea that, sort of, Western companies that are tax efficient are exploiting these places rather than bringing inward investment to them, I think, is a rather neo-imperialist old style way of looking at the world.  We want more of that inward investment.  That creates jobs and creates growth in some of the poorest countries in the world."

    Leaders of the G8 countries meet in Britain next month. British Prime Minister David Cameron has promised to include the issue of tax havens in their summit meeting.

    And that's the Economics Report from VOA learning English. I'm Mario Ritter.