Tax justice must be on the agenda for the post-2015 development goals

Anything else would be dodging the problem.

As the 2015 deadline approaches for achieving the "Millennium Development Goals" – the global benchmarks for tackling poverty – questions are growing louder about how far we’ve come, and what we do next. David Cameron is to co-chair a UN High-Level Panel on this "post-2015" agenda. At conference tables, across the blogosphere and in an avalanche of reports, donors and development experts are starting to haggle over the future of aid and development.  

Cameron has set out his stall already, describing his vision of a "golden thread" of development through tackling corruption; securing rights; and shifting focus from aid to economic growth, led by business and private enterprise. Cameron’s co-chairs, Presidents Susilo Yudhoyono of Indonesia and Ellen Johnson Sirleaf of Liberia, also want to look beyond aid to unlock wealth through “economic growth, trade, tackling corruption, effective government and open societies”.

There’s no denying that a re-think is needed. The world has profoundly changed since the MDGs were conceived in the 1990s. With persistent crises in wealthy economies, global aid levels fell last year for the first time since 1997. The UK government is still rightly committed to reaching the UN agreed target of spending 0.7 per cent of national income on aid, and though it will remain vital for many years to come, it’s high time to also look for new resources to fight poverty.

At the same time, we’ve witnessed a seismic shift in the geography of economic growth and potential. It’s now clear that Asian and African economies will continue to grow far faster than in Europe and North America. The boom is far from universal, but nor is it confined to the new "big beasts" of the global economy. In the last decade some sub-Saharan African countries have experienced growth rates higher than Brazil and China – but with health, education and incomes lagging far behind in many places. 

Cameron and his co-chairs rightly acclaim the world-changing potential of this economic transformation – but the poorest citizens are yet to see its impact.  Certainly efforts to tackle poverty must draw more from developing countries’ own growth and resources, far more reliable than volatile aid flows. But the global development challenge is now neither simply to increase aid, nor just to help developing countries to attract private investment and promote growth. It is to convert the rewards of investment and growth into jobs, incomes, health and education for citizens. 

This can only happen if developing countries are able to raise their own revenue fairly, and spend it equitably. Financing the fight against poverty requires companies, investors and wealthy individuals to pay their taxes due. Yet the OECD has estimated that developing countries lose more to tax havens than they receive in aid. ActionAid estimates that just one multinational company we investigated, the FTSE100 drinks giant SABMiller, has avoided £20m a year in taxes across Africa and Asia – enough to put an extra 250,000 children in school – helped by shifting profits through a network of companies in Switzerland, Mauritius and the Netherlands. 

Most developed countries collect between 30 and 50 per cent of their GDP in tax revenue. In sub-Saharan Africa the average is just 17 per cent. How can we help bridge the gap? Aid can help. Assistance to revenue authorities in developing countries to combat tax dodging is some of the most cost-effective aid imaginable. The Rwanda Revenue Authority was set up in 1998 with the help of a £20m grant from the UK – the same amount it now collects in revenues every four weeks. Equally vital is funding to help citizens hold government spending to account, scrutinising budgets and social programmes and ensuring that they’re meeting the needs of the poorest. 

Closer to home, the IMF, UN, World Bank and OECD have all urged developed countries to make sure changes to their own tax regimes don’t damage those of developing countries. Yet the Finance Bill currently going through Parliament threatens to open up a major new loophole in the UK’s 'Controlled Foreign Companies’ rules, making it easier for multinational companies to shift profits into tax havens. ActionAid estimates this rule change is likely to cost poor countries £4bn a year, on top of nearly £1bn to the UK’s public finances annually. This flies in the face of the need to support developing countries’ efforts to become dependent of aid.

And at a global level, the fight against international tax avoidance has slipped steadily down the agenda of the G8 and the G20 over the last 18 months, despite its potential to stabilise public finances in the developing and the developed world alike. The "post-2015" re-think is an opportunity to put it back on the agenda. At stake is the future of the fight against poverty. 

High life - but at what cost? SABMiller has avoided tax across Africa. Photograph: Getty Images

Mike Lewis is a tax justice campaigner at ActionAid

ANDREY BORODULIN/AFP/GETTY IMAGES
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Letter from Donetsk: ice cream, bustling bars and missiles in eastern Ukraine

In Donetsk, which has been under the control of Russian backed rebels since April 2014, the propaganda has a hermetic, relentless feel to it.

Eighty-eight year-old Nadya Moroz stares through the taped-up window of her flat in Donetsk, blown in by persistent bombing. She wonders why she abandoned her peaceful village for a “better life” in Donetsk with her daughter, just months before war erupted in spring 2014.

Nadya is no stranger to upheaval. She was captured by the Nazis when she was 15 and sent to shovel coal in a mine in Alsace, in eastern France. When the region was liberated by the Americans, she narrowly missed a plane taking refugees to the US, and so returned empty-handed to Ukraine. She never thought that she would see fighting again.

Now she and her daughter Irina shuffle around their dilapidated flat in the front-line district of Tekstilshchik. Both physically impaired, they seldom venture out.

The highlight of the women’s day is the television series Posledniy Yanychar (“The Last Janissary”), about an Ottoman slave soldier and his dangerous love for a free Cossack girl.

They leave the dog-walking to Irina’s daughter, Galya, who comes back just in time. We turn on the TV a few minutes before two o’clock to watch a news report on Channel One, the Russian state broadcaster. It shows a montage of unnerving images: Nato tanks racing in formation across a plain, goose-stepping troops of Pravy Sektor (a right-wing Ukrainian militia) and several implicit warnings that a Western invasion is nigh. I wonder how my hosts can remain so impassive in the face of such blatant propaganda.

In Donetsk, which has been under the control of Russian-backed rebels since April 2014, the propaganda has a hermetic, relentless feel to it. If the TV doesn’t get you, the print media, radio and street hoardings will. Take a walk in the empty central district of the city and you have the creeping sense of being transported back to what it must have been like in the 1940s. Posters of Stalin, with his martial gaze and pomaded moustache, were taboo for decades even under the Soviets but now they grace the near-empty boulevards. Images of veterans of the 1941-45 war are ubiquitous, breast pockets ablaze with medals. Even the checkpoints bear the graffiti: “To Berlin!” It’s all inching closer to a theme-park re-enactment of the Soviet glory years, a weird meeting of propaganda and nostalgia.

So completely is the Donetsk People’s Republic (DPR) in thrall to Russia that even its parliament has passed over its new flag for the tricolour of the Russian Federation, which flutters atop the building. “At least now that the municipal departments have become ministries, everyone has been promoted,” says Galya, wryly. “We’ve got to have something to be pleased about.”

The war in the Donbas – the eastern region of Ukraine that includes Donetsk and Luhansk – can be traced to the street demonstrations of 2013-14. The former president Viktor Yanukovych, a close ally of Vladimir Putin, had refused to sign an agreement that would have heralded closer integration with the EU. In late 2013, protests against his corrupt rule began in Maidan Nezalezhnosti (“Independence Square”) in Kyiv, as well as other cities. In early 2014 Yanukovych’s security forces fired on the crowds in the capital, causing dozens of fatalities, before he fled.

Putin acted swiftly, annexing Crimea and engineering a series of “anti-Maidans” across the east and south of Ukraine, bussing in “volunteers” and thugs to help shore up resistance to the new authority in Kyiv. The Russian-backed rebels consolidated their power base in Donetsk and Luhansk, where they established two “independent” republics, the DPR and its co-statelet, the Luhansk People’s Republic (LPR). Kyiv moved to recover the lost territories, sparking a full-scale war that raged in late 2014 and early 2015.

Despite the so-called “peace” that arrived in autumn 2015 and the beguiling feeling that a certain normality has returned – the prams, the ice creams in the park, the bustling bars – missiles still fly and small-arms fire frequently breaks out. You can’t forget the conflict for long.

One reminder is the large number of dogs roaming the streets, set free when their owners left. Even those with homes have suffered. A Yorkshire terrier in the flat next door to mine started collecting food from its bowl when the war began and storing it in hiding places around the flat. Now, whenever the shelling starts, he goes to his caches and binge-eats in a sort of atavistic canine survival ritual.

Pet shops are another indicator of the state of a society. Master Zoo in the city centre has an overabundance of tropical fish tanks (too clunky to evacuate) and no dogs. In their absence, the kennels have been filled with life-size plastic hounds under a sign strictly forbidding photography, for reasons unknown. I had to share my rented room with a pet chinchilla called Shunya. These furry Andean rodents, fragile to transport but conveniently low-maintenance, had become increasingly fashionable before the war. The city must still be full of them.

The bombing generally began “after the weekends, before holidays, Ukraine’s national days and before major agreements”, Galya had said. A new round of peace talks was about to start, and I should have my emergency bag at the ready. I shuddered back up to the ninth floor of my pitch-dark Tekstilshchik tower block. Shunya was sitting quiet and unruffled in his cage, never betraying any signs of stress. Free from Russian television, we girded ourselves for the night ahead.

This article first appeared in the 05 February 2015 issue of the New Statesman, Putin's war