Tax in Developing Countries: Increasing Resources for Development

Written evidence submitted by ActionAid, the CBI, and Christian Aid

ActionAid is an international NGO working in 45 countries worldwide, headquartered since 2003 in South Africa. Its rights based approach, which looks at the systemic causes of poverty, forms the foundation for its work on development. For more information please contact Sebastian Dance, Government Relations Adviser, sebastian.dance@actionaid.org 020 3122 0630.

Christian Aid is a Christian organisation that works globally in over 40 countries for profound change that eradicates the causes of poverty, striving to achieve equality, dignity and freedom for all, regardless of faith or nationality. For more information please contact Sol Oyuela, Senior UK Political Adviser, SOyuela@christian-aid.org 0207 523 2109.

The CBI is the UK's premier business lobbying organisation, speaking for more than 240,000 companies of every size, including many in the FTSE 100 and FTSE 350, mid-caps, SMEs, micro businesses, private and family owned businesses, start ups, and trade associations and in every sector. For more information please contact Richard Woolhouse, Head of Tax & Fiscal Policy, richard.woolhouse@cbi.org.uk.

1. While ActionAid, Christian Aid and the CBI have made separate submissions in response to the Committee’s call for evidence, we wish to let the Committee know about one very important issue on which we agree. People who work for member companies of the CBI, as well as Christian Aid, ActionAid and their partner organisations, share a common goal of helping to improve the living standards of those in developing countries. We may not agree on all the ways in which this might be achieved – or indeed what all of the root causes are. But we do agree that a properly functioning tax system – one based on good tax policy, and an efficient tax administration – is critical to the functioning of a stable, prosperous state that responds to the needs and wishes of its citizens.

2. There is currently a substantial demand from developing countries, in particular many in Africa, for support from the UK and other developed countries to help them raise more tax revenue. This includes capacity-building to assist with the formulation and administration of tax legislation, in particular in the area of international taxation. As NGOs and UK businesses working in developing countries, we encourage the UK government to devote more resources to supporting this demand, including through the provision of funding and technical expertise. Technical assistance should at all times be driven by demand from developing countries themselves, and we support the work of the African Tax Administration Forum to develop a diagnostic toolkit to assist countries in assessing their own needs.

3. We strongly urge DFID to take a more active role in the coordination of tax capacity building work, through both the support of HMRC projects in these countries, as well as through its country offices, in conjunction with the aid agencies of other countries, and via multilateral organisations and the technical assistance programmes they offer.

4. We would emphasise that the practical work that HMRC has already done in terms of training, and on-going support, has proved very valuable in countries such as Rwanda, and an expansion of these capacity-building efforts would be enormously beneficial.

5. This effort needs to be on-going. These capacity issues cannot be solved by a single conference, but by the patient sharing of experience and building of relationships between tax professionals and other stakeholders such as NGOs.

6. We also believe it is important for DFID to report publicly on the whole of the government's work on tax and development

February 2012