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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.

 

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. 

The Good, the Bad, and the Ugly: How Do Tax Incentives Impact Investment?

There are arguments for and against “spending through the tax system.” On one hand tax incentives are relatively easy to implement; they don’t require an outlay of cash and they make use of information that revenue agencies already collect. But on the other, loading the tax system with too many policy objectives conflicts with the drive for a coherent, simple, transparent tax system. Despite decades of advice from international organisations to curtail tax incentives, they remain a popular tool for governments.

Give Us the Courage to Change the Things We Can

Rory Stewart MP gave a wise speech about how Britain can play a role in global peace and stability. In my brief response to the Minister, I suggested twelve policies which are within our control which would help create conditions for stronger, more peaceful, more prosperous countries to thrive, and so reduce the risks of future conflict and instability. Here they are.

The Panama Papers and the Correlates of Hidden Activity

Unless you’ve been living under a rock in the British Virgin Islands, you might have heard of the massive leak of documents from Mossack Fonseca, a Panamanian law firm whose services included helping its clients create shell corporations and store their assets in offshore tax havens. In addition to a torrent of political scandals and crises, the leak has resulted in a renewed rallying cry to reform the international tax system. But aside from the political implications, the Panama Papers have the potential to help us better understand two things: what kinds of countries do these offshore firms do business with and are the tools we use for determining the relative risks of hidden cash any good?

Malawi Can’t Afford Evidence-Free Tax Campaigns

Over the past couple of weeks Malawi has become the latest poster child for UK campaigns arguing that changes to the international tax system can deliver outsize returns for development. Specifically, Action Aid is calling on the UK government to renegotiate a 60-year-old tax treaty. Questions were also raised about this issue in the House of Commons.

Talking about Tax Is Taxing: Pretending It Is Simple Will Hurt the Poor

Here’s an obvious truth: tax lost to trade misinvoicing in Africa does not equal tax lost to transfer mispricing by multinational corporations in Sierra Leone, which does not equal lost health-care spending. Unfortunately, a policy paper released on Tuesday by Oxfam makes exactly these equivalences. This sort of imprecision is widespread, and it’s not going to help the poor.