British tax havens linked to 1,000 daily deaths

It makes you proud to be British doesn’t it? Not only is Britain itself widely regarded as one of the world’s best tax havens by the super-rich as a result of our very accommodating non-dom rules, but we’re also fuelling global poverty because so many of our former colonies have become “no questions asked” tax and secrecy havens.

A study by the development charity Christian Aid accuses the British government of being “particularly responsible” for illegal, trade-related tax evasion, since nearly half the world’s tax havens are British overseas territories and Crown Dependencies.

The report argues that the inadequate tax system in islands and archipeligoes such as Bermuda, the Cayman Islands and British Virgin Islands allows transnational corporations to siphon wealth out of poor countries. It claims that poorer countries are routinely denied the tax that is rightly theirs by multinational corporations and other businesses which use both tax avoidance (legal) and tax evasion (illegal) to limit their tax liability.

The report says:- “An international industry has grown up specifically to maximise tax efficiency or, in other words, to deny sovereign governments their income. For governments in the developing world, this amounts to being robbed of their ability to improve their economies and the lives of their poorest people.”

The report, Death and taxes: the true toll of tax dodging, estimates that the tax avoidance and evasion industries, which are heavily promoted and influenced by the ‘Big Four’ accountancy firms PwC, KPMG, Deloitte and Ernst & Young , and played with alacrity by global banks, other financial institutions and transnational corporations, have a dire effect on the finances of the developing world. The charity estimates that 1,000 young people die every day because $160 billion is lost to third world countries as a result.

The report states: “The situation is stark and urgent. We predict that illegal, trade-related tax evasion alone will be responsible for some 5.6 million deaths of young children in the developing world between 2000 and 2015. That is almost 1,000 a day. Half are already dead.

The accusations came a few days after prime minister Gordon Brown called on businesses to do more to help poorer countries in a speech in Canary Wharf. Perhaps they should start by taking a look at their approach to tax?

Christian Aid’s conclusions are based on research by Raymond Barker, a senior fellow at the US Centre for International Policy, and followed 550 anonymous interviews with heads of trading companies in 11 countries. Most of the culprits are transnational corporations that use creative and/or false accounting in order to reduce the amount of tax they pay. In an age when a plc’s board perceives the creation of shareholder value as its only goal, such companies will argue that their duties are to their shareholders, not to national exchequers.

Christian Aid takes issue with the secrecy afforded to such companies in 70 tax havens around the world, but also stresses that the ‘Big Four’ accountancy firms have played a major part in promoting their use.

The charity is calling on the UK government to take a lead by making tax havens more transparent, and by forcing multinationals to publish their accounts on a country-by-country basis. 

Daleep Mukarji, a director of Christian Aid, said: “We predict that illegal, trade-related tax evasion alone will be responsible for the deaths of some 5.6 million children under the age of five between 2000 and 2015. The abuse is so widespread and damaging that it is tantamount to a new slavery. The rich are getting richer on the backs of some of the most impoverished and vulnerable communities in the world.”

This blog post was published on 12 May 2008