Tax Evaders Accused of 'Stealing from Poor' on Eve of U.N. Poverty Talks
Abid Aslam, OneWorld US
Mon Sep 12, 9:23 PM ET
WASHINGTON, D.C., Sep 12 (OneWorld) - The lamb appeared to echo the lion Monday, when global charity Christian Aid and advocacy group Tax Justice Network added their voices to that of the International Monetary Fund (IMF) in accusing corporate and wealthy tax dodgers of stealing from the poor.
Impoverished countries are losing $500 billion per year--far more than foreign aid--in revenues to ''prosperous international tax dodgers,'' Christian Aid said in a report entitled ''The Shirts Off Their Backs.''
That is because the global financial services industry has created and sustains a framework within which most world trade is routed through tax havens, Tax Justice Network added in its report, ''Tax Us If You Can.''
The UK-based groups released their findings ahead of Sep. 14-16 United Nations talks on an action plan to vanquish poverty, illiteracy, and preventable diseases by 2015.
''World leaders will never meet their commitments to tackling global poverty unless poor countries are allowed to stop big businesses and rich elites from dodging tax and stealing wealth,'' Christian Aid said.
''For decades, poor countries like Kenya and Bolivia have been hemorrhaging money to which they are properly entitled,'' said Andrew Pendleton, the organization's senior policy adviser.
''If these leaks could be plugged it would mean that poor countries would not have to be so reliant on handouts that so often come with damaging strings attached.''
The accusations hurled at tax evaders seemed likely to resonate not only with frustrated tax collectors and ordinary citizens in the developing world but also with the IMF, which long has advocated increasing poor nations' tax receipts, and with wealthy U.S. investors angered by apparently ceaseless revelations of corporate financial and accounting shenanigans, many involving offshore tax havens.
''Accountancy firms, many of them global corporations, are champions of 'tax planning,' whereby, along with their clients, they organize networks of offshore subsidiaries to avoid paying tax, '' Christian Aid said.
Among examples it cited was that of failed energy trader Enron, whose accountants and auditors, now-defunct Arthur Andersen, ensured that the company paid no U.S. taxes between 1996 and 1999 by setting up a global network of 3,500 companies, 400 of them registered in the Cayman Islands.
Two weeks ago, Big Four accounting firm KPMG agreed to pay $456 million to settle a case brought against it by the U.S. Department of Justice for selling fraudulent tax shelters, avoiding an indictment that could have crippled the firm.
As part of the settlement, KPMG said Monday it had let go several senior executives involved in preparing the shelters.
Such settlements are virtually unheard of in countries where regulators lack the clout and financial resources needed to successfully prosecute tax dodgers and, according to Christian Aid, the consequences are debilitating.
''There is a crisis developing in poor countries as public services and infrastructure crumble because of a lack of public money,'' said Pendleton. ''Tax avoidance by wealthy people and multinational companies is one of the main causes of this.'' [..]
Christian Aid said it hoped the reports would help spur discussion at this week's U.N. summit on the so-called Millennium Development Goals (MDGs).
''Tax is the forgotten issue in the debate about how to tackle poverty and must be added to trade, debt, and aid if the world is serious about meeting the MDGs,'' the group said.
The United Nations said in a report last week that the goals, to which they agreed in 2000, likely would not be met on time.
If current trends continue, more than 800 million people will live in utter poverty by 2015, some 380 million more than envisioned under the MDGs, the world body said in its latest annual 'Human Development Report.'
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