Nigeria
8. April 2007
FS Taxation
Africa loses $150bn yearly through tax default
By Matthew Emmanuel
The African Union (AU) has reported a yearly loss of more than $150 billion by its member states through tax avoidance by giantcorporations and capital flight using a pinstripe infrastructure of western banks, lawyers and accountants. The plundering acts, in which western companies and financial firms are complicit was revealed at the recent launch in Nairobi of a pan-African campaign group, the Tax Justice Network for Africa (TJNA). The TJNA is to investigate multinational tax avoidance and abuses of tax havens by corrupt African politicians on a country-by-country basis, as well as lobby global leaders to commit to a proper crackdown. Alvin Mosioma, the TJNA’s first coordinator, said it was astonishing that the World Bank and International Monetary Fund (IMF) had not researched capital flight and tax. He noted that these issues have not been included within the debate on poverty alleviation until now. He said the network will publish precise information about tax avoidance in African countries and focus on the role of multinationals with the message that tax justice will improve democracy. There is also concern on how transfer pricing techniques, otherwise known as profit-laundering, are deployed by giant firms in extractive industries to massage down their profits. According to a report, African governments are missing out in increasing tax and royalties, and in some cases are actually receiving less revenue from mining companies than before despite the global commodity boom over the past three years. For example, as the production of copper, gold, nickel and platinum soars, research from Christian Aid showed that the Tanzanian government’s revenue from gold fell by nearly a third once the rise in prices has been factored in. Zambia also saw revenues from copper halve. Campaigners have attributed this to the pressure from the IMF to privatise industries on advantageous terms to mining firms. In his reaction, Anna Thomas, Christian Aid’s policy manager noted that the myth that tax rates have to be slashed to attract overseas investment needs to be challenged.
