Taxes are the price we pay to live in countries with schools, hospitals and roads. Governments need long term sustainable revenues to pay for services we rely on such as doctors and teachers. In developing countries often these are met by foreign aid. But it is unreliable. The amount of money countries raise through tax plays a crucial role in determining the services it can provide to its people.
No country has ever escaped poverty without building a stable tax base. However, tax systems in developing countries are often undermined by tax havens and by unfair accounting practices, depriving developing countries of the money they rely on to provide teachers all year, to build new schools and to pave roads.
The OECD estimates that developing countries lose more money every year from tax dodging than they receive in aid. Avoiding taxes, using tax havens and other measures is not an illegal practice; however it is morally wrong, depriving vulnerable countries of valuable revenue. The companies that have the know-how about tax havens are often the ones that can afford to pay.
15% is the average proportion of national income raised as tax in poor countries. In developed countries the figure is 36%. It’s easy to see who is losing out. If even poor people in poor countries pay their taxes, big companies should have to pay theirs too.
Nobody likes paying taxes, but this is about justice and fairness. It’s about making sure all companies follow best practice no matter what country they operate in. Developing countries deserve their due just as rich countries do.
You can find out more at: http://www.actionaid.org.uk/101736/tax_justice.html
