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Views from the Center

CGD experts offer ideas and analysis to improve international development policy. Also check out our Global Health blog and US Development Policy blog.

 

Tanzania's Macroeconomic Outlook: Less Growth, More Repression

As economic indicators deteriorate, the Tanzanian government has jailed an opposition leader for questioning the Bank of Tanzania's growth statistics. It's time for the World Bank and the IMF to speak up. If it's illegal to question a government's statistics, why should anyone trust them?

Oxfam’s Tax Evasion Shock Video Is Distressing for the Wrong Reasons

“Some viewers may find this content distressing” is how Oxfam GB caveats its new video on corporate tax “dodging.” But what I find most disturbing is how it oversells tax transparency as a panacea for domestic resource mobilisation in developing countries.

Why Development Finance Institutions Use Tax Havens

Development Finance Institutions (DFIs) exist to promote development by investing in the poorest, least developed countries. They often route those investments via holding companies or private equity funds domiciled in tax havens. On the face of it, that seems absurd: tax havens are widely seen as a drain on development, depriving cash-strapped governments of billions of dollars in public revenue. In a new paper I argue that whilst widespread opposition to DFIs investing via tax havens is understandable, it is misguided. Banning the use of tax havens would do more harm than good. 

Making Blockchain Technology Work for Development: The Need for Data and Dialogue

While blockchain-based solutions have the potential to increase efficiency and improve outcomes dramatically in some use cases and more marginally (if at all) in others, key constraints must be resolved before blockchain technology can meet its full potential in this space. Overcoming these constraints will require increased dialogue between the development and technology communities and a stronger commitment to collecting and sharing data about what’s working and what isn’t in pilot projects that use the technology.

Inflated Expectations about Mineral Export Misinvoicing are Having Real Consequences in Tanzania

In May, President Magufuli of Tanzania appointed two special committees to investigate the contents of 277 containers stuck at Dar-es-Salaam. The committees' belief that they have uncovered a case of massive misinvoicing (i.e., misrepresentation of the value or quantity of exports) does not seem plausible for five reasons. For starters, the scale of mineral smuggling required for it to be true is implausible.

Why Do People Think Nigeria Might Be Losing $1 Trillion to Corporate Tax Evasion?

Misunderstandings about the scale of multinational tax avoidance are common. The origin story for an erroneous $1 trillion figure is a case of bad lip reading, but its proliferation reflects the belief that there are absolutely huge sums of money for development at stake from cracking down on multinational tax avoidance. The figure itself may be ridiculous but these myths are serious—they undermine both trust in revenue authorities and businesses, overheat disputes, and make it harder to judge practical progress on improving tax systems and compliance.

Beneficial Openness: Is More Transparency Always Better?

Financial transparency has been promoted as a key solution to improving governance and accountability. Some approaches are targeted such as open contracting (focused on public procurement), and regulations requiring extractive industry companies to ‘publish what they pay.’ Other proposals cast a much broader net such as calls for company owners to be listed on registers of beneficial ownership and mandatory publication of ‘country-by-country’ reports by all multinational corporations.

Criminal Finances: Should the UK Be Imposing Public Registers of Beneficial Ownership on Its Ex-Colonies?

A new Criminal Finances Bill is making its way through the UK House of Commons which aims to make it harder for criminals and kleptocrats to use the UK financial system to launder ill-gotten gains, while minimising the burden on legitimate businesses and individuals. The bill gives expanded powers to law enforcement agencies and makes banks and other businesses liable for prosecution if they fail to prevent facilitation of tax evasion. It also introduces ‘Unexplained Wealth Orders’ (UWOs). These would allow the authorities to demand explanations about any assets that appear suspicious. These measures should have both domestic and international benefits in tackling illicit financial flows.