New Internationalist

Mining and tax dodging: a dirty business all round

While some of us enjoy lie-ins this Saturday, British MPs will be in Zambia’s Copperbelt, breathing in shockingly high levels of sulphur dioxide pollution and investigating what else mining companies contribute to the community.

Members of Parliament’s International Development Committee are visiting the Southern African nation as part of their inspired inquiry into how poor countries can collect more tax, not least from transnational mining companies.

The MPs are interested in tax because poor countries lose some $160 billion a year to tax dodging by transnationals – much more than what they receive in aid.

Like many other transnationals, Glencore does not reveal how much tax it pays in each country where it works – although it publishes global figures. This is entirely legal – but it makes it much harder for tax authorities to tell whether companies are paying the right amount of tax.

Even in rich countries such as Britain, tax authorities struggle to get to grips with big companies’ hugely complex financial arrangements, which often involve highly secretive tax havens. For poor countries such as Zambia, keeping up with transnationals is much harder.

And this is where the MPs’ inquiry can make the biggest difference, for Zambians and people across the world. The trouble with financial secrecy is that it encourages bad behaviour such as tax dodging and corruption, because it makes it easy to hide.

If companies had to reveal details such as the profits they make and the taxes they pay in every country in which they operate, then it would be far harder for the unscrupulous to conceal wrongdoing from tax authorities and others with an interest in seeing that big companies play fair.

Details of big companies’ tax payments would also help people to hold their governments to account about how they are spending tax revenues.

And if tax haven secrecy were ended – something the world’s powerful governments have the power to do – then that would make tax dodging, corruption and other financial crimes all the harder.

In short, transparency is good for development. Let’s hope the MPs agree.

Rachel Baird works at Christian Aid. To find out more about the charity’s tax campaign, visit: http://www.christianaid.org.uk/ActNow/trace-the-tax/index.aspx

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