simple math or – again, why tax havens are bad

One does not have to be a master in math to understand this: since 2007 UK government (meaning DFID) has provided development aid to Zambia of around GBP 200 million; since 2007 UK based multinational company Associated British Foods has made profit of its operations in Zambia worth about GBP 123 million and through tax optimization (read – tax havens) has not paid any tax in Zambia. This company which is heavily profiting from the sugar industry in Zambia is an excellent example of how resources are depleted by foreign companies and how disproportionate benefits does the local society gain.

Moreover, if you compare how much UK government is giving to Zambia and how much UK based businesses are gaining from their operations there (above mentioned company, of course, is not the only one operating there and following the same practice), it becomes clear what is the balance of this ‘development assistance’.

Trade liberalization which is a mantra of every neoliberal economist again proves here that as such it is not necessarily making positive impact in a developing country. There are no positive effects of trade liberalization unless foreign companies when doing their business in developing countries do pay their fare share for using local resources. It is not the developing countries which should be thankful for foreign companies coming and working there, it is the foreign companies which should be thankful to those countries for allowing them to operate there.

Tax Justice Network has written a good article on this and Action Aid has launched a campaign to demand UK Government to make an action.

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2 thoughts on “simple math or – again, why tax havens are bad

  1. Not only has government’s aid always been directed towards countries where they had strategical interests (basically business opportunities) but in this decade a strong push has been made towards public-private partnerships (PPPs) where the link between one and the other is no longer indirect, and becomes a direct support of business operations overseas by aid funds.

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