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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.

 

Exaggerating Multinational Tax Avoidance Does Not Help Africa

Matti Kohonen of Christian Aid holds out the enticing prospect that African countries could collect an additional 1.5 percent of gross domestic product in tax if only big multinationals would stop dodging. The problem is that this estimate is (still) based on wishful thinking. Multinational corporations should pay tax, but the scale of potential revenues depend on underlying levels of investment and profitability in a country. 

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.