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Margaret Hodge MP: Global tax transparency can eradicate poverty

Margaret Hodge MP: Global tax transparency can eradicate poverty

PoliticsHome | Commonwealth Parliamentary Association

3 min read

Former Public Accounts Committee Chair Margaret Hodge writes ahead of next week's CPA UK Workshop in partnership on Parliamentary Action on Tax Transparency, Tax Evasion and Tax Avoidance

A new global development agenda will be put in place by the UN this year, consisting of 17 high-level and ambitious goals underpinned by a comprehensive framework of 169 targets. Through this, UN member states will aim to ‘end poverty in all its forms’ by 2030.

One of the biggest challenges for the UN, Heads of Government, Finance Ministers and Development Ministers is how to finance the agenda; it will take an exponential increase in the amount of funds available for global development. In the words of the World Bank Group, the IMF and the multilateral development banks in a discussion note published in April this year, the numbers need to move ‘from billions to trillions.’ They envisage these funds coming not only from official development assistance; it will require investment of all kinds, public and private, north and south, national and international. Globally, we can no long afford to ignore any source of finance, and for countries in the global south, making sure they get all the monies due from taxation is at the top of the list as a critical source of income. The G20 has focused in recent times on tax, trade and transparency. The Leaders’ Summit in October 2014 saw a number of moves to stop corporations avoiding tax through mechanisms known as “base erosion” and “profit-shifting”, building on the OECD work to reform international tax rules. Numerous studies in the past year have highlighted that tax evasion and avoidance contributed to over $1 trillion in illicit flows from African countries between 1980 and 2009.

Even in the UK, the shocking figures that represent the true cost of tax evasion and avoidance often highlighted by the Public Accounts Committee, which I chaired in the last Parliament – have often made the headlines. In 2015, tax is big news.

In recent years there has been growing multilateral political backing for the promotion of a global ‘tax transparency’ agenda; the G20’s resolutions are only the latest in a chorus of calls for this to be made a reality. Vital to the success of this move is exchange of information, including automatic exchange of financial account information and concerted action to control the scope of tax avoidance by multinationals.

Members of parliaments will be key players in ensuring that governments are meeting their international commitments, and working to secure a stable economic future crucial for the delivery of transformative, inclusive and sustainable development outcomes within the post-2015 development framework.  

Next week, 50 legislators from across Africa will attend a conference at Westminsterexploring how parliamentarians can work to guarantee tax transparency and country by country reporting to tackle aggressive tax avoidance and evasion. The event, co-hosted by the Commonwealth Parliamentary Association UK (CPA UK) and the Organisation for Economic Cooperation and Development (OECD), is held in recognition of the vital role parliamentarians play in ensuring that their countries’ taxation policies are fair and transparent and properly serve the interests of their taxpayers and voters. Parliamentarians are involved in so many ways; from legislating for equitable taxation policies and closing loopholes in existing legal frameworks, to guaranteeing the necessary open exchange of information and holding governments to account on failures to bring perpetrators of large-scale tax avoidance and evasion to justice.

Eradicating global poverty will not be possible without fair contribution from all, and parliamentarians must, on behalf of their citizens, seek to guarantee that this can happen. We must act now to ensure that in the new era of tax transparency, tax avoiders will soon have no place to hide.

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