The Hindu Business Line : Perturbing finding

WHILE, on the one hand, the 150 or more heads of states and governments attending the UN session in New York are reviewing the extent of the progress made in attaining the Millennium Development Goals (MDGs), on the other, the ground is cut under their feet by the perturbing conclusion of a report by Christian Aid in conjunction with the Tax Justice Network, published in the September 13 issue of The Guardian.

Of course, development economists engaged in the study of impact of official development assistance have for long been talking of "blood transfusion" from the poor to the rich nations being one of the perverse effects of the flow of aid. The finding of the report is yet another stark reminder of developing countries becoming victims of the pernicious outgrowths of seemingly well-intentioned and apparently friendly foreign financial, commercial and business interests.

The report has been prepared with special reference to UK companies, but may be applicable to industrial countries in general. It declares flatly that the developing world is deliberately kept poor by multinational corporations, acting in collusion with leading accountancy firms, banks and business conglomerates. They are alleged to deprive developing countries of nearly $500 billion in evaded taxes every year, which "dwarfed the amount of annual overseas aid". It certainly "beggars belief"

According to the report, businesses are able to "dodge" taxes by the familiar stratagems of secreting money in offshore banks, trusts and companies, creating tax havens away from Britain. In the bargain, corrupt leaders, criminals and terrorists are also helped "to hide away their ill-gotten gains by piggybacking" on them. Needless to say, "haemorrhaging" of astronomical amounts through wilful tax evasion acts as a terrible drag on economic growth on all fronts.

It is clear that unless business, industry and accounting firms behave responsibly in regard to their obligations, there is no hope of reducing world poverty by half by 2015 as stipulated in the MDGs. One can readily agree with the proposition emanating from the report that "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"

B. S. Raghavan

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