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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.

 

What Can International Development Learn from Britain’s Olympic Team?

There is a lot of chatter about the reasons for Britain’s relative success in the Olympic games. This transformation in Britain’s sporting performance has generated a raft of tortured analogies with various non-sporting challenges, such as industrial and education policies (on which Britain’s performance is rather less stellar). So I’m leaping on the bandwagon with two lessons for international development.

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?

New Study of Somali Remittance Flows Does Not Actually Tell Us Much about Somali Remittance Flows

The FAO’s Somalia Food Security and Nutrition Analysis Unit (FSNAU) released an assessment of external remittances to Somalia, based on a survey of both urban and internally-displaced families. The headline result from the report was that apparently remittances were on the decline, but the FSNAU survey doesn’t actually tell us much about how remittance flows to Somalia have changed in the past six months.

If the Cost of Sending Remittances Goes Up and No One Is Around to Measure It, Did It Really Happen?

The World Bank does maintain an impressively large database of remittance prices around the world, called Remittance Prices Worldwide, covering over 200 remittance corridors. It is a massive undertaking which involves surveying hundreds of remittance companies across 32 different countries roughly every quarter, but it turns out that the data only cover approximately half of the world’s remittances, even though the number of corridors covered has been slowly expanding every year. For Somalia specifically, while the database covers remittances from the United Kingdom, it only began surveying US firms this year, after the closure of bank accounts.

How Much Do We Really Know about Multinational Tax Avoidance and How Much Is it Really Worth? Comments Welcome!

At the Financing for Development conference in Addis Ababa this week, the issue of international cooperation to address ‘tax dodging’ and illicit flows will be higher up the agenda than ever before. Credit for this is due in no small part to the various non-governmental organizations that have built up public consciousness and pressure through sustained campaigns focused on the tax affairs of multinational companies.

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.

Poorer Countries Lose More from Corporate Profit-Shifting

Lower-income countries in general suffer the greatest shrinkage of the tax base as a result of corporate profit-shifting. In a new working paper, Simon Loretz and I find that the multinational tax bases of some lower-income countries could even be double their current size. We also find that some of the ‘tax haven’ jurisdictions that benefit most have received surprisingly little attention. Any guesses?

#Luxleaks: The Reality of Tax ‘Competition’

Aside from lurid revelations about individual companies and the big four accounting firms, the leaks of multinationals’ tax deals with Luxembourg confirm­—and expose to a wider audience­—the true nature of the tax ‘competition’ that prevents the emergence of effective international rules.

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