Honest Accounts? The True Story of Africa’s Billion Dollar Losses

Honest Accounts? The True Story of Africa’s Billion Dollar Losses

Report for Health Poverty Action, War on Want, World Development Movement, Jubilee Debt Campaign and others (July 2014)

This report is a first comprehensive attempt to measure the financial flows in and out of sub-Saharan Africa. It shows that Africa is being drained of resources, losing far more each year than it receives. While $134 billion flows into the continent each year (mainly in the form of loans, foreign investment and aid) $192 billion is taken out (mainly in profits repatriated by multinational companies, tax dodging and the costs of adapting to climate change). The result is that Africa suffers a net loss of $58 billion a year. Thus the idea that we are aiding Africa is flawed; it is Africa that is aiding the rest of the world. While we are led to believe that aid from the UK and other rich countries is a mark of our generosity, the research shows that wealthy countries benefit from many of Africa’s losses.

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Losing Out: Sierra Leone’s massive revenue losses from tax incentives

Losing Out: Sierra Leone’s massive revenue losses from tax incentives

Report for Budget Advocacy Network, Sierra Leone (April 2014)

This report analyses Sierra Leone’s ‘tax expenditure’ – i.e., the amount of revenues lost by the government’s granting of tax incentives and exemptions. Using figures obtained from the National Revenue Authority, the report estimates that the government lost revenues worth $224 million in 2012, amounting to an enormous 8.3 per cent of GDP. In 2011, losses were even higher – 13.7 per cent of GDP. The massive rise in revenue losses since 2009 is the result of tax incentives granted to the mining sector. The report estimates that the government will lose revenues of $131 million in the three years 2014-16 alone from corporate income tax incentives granted to five mining companies. Tax expenditures could instead be spent on improving education and health services, investing in agriculture and in providing social protection to vulnerable groups. Yet in 2011 the government spent more on tax incentives than on its development priorities. In 2012, tax expenditure amounted to an astonishing 59 per cent of the entire government budget – over 8 times the health budget and 7 times the education budget.

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Malawi’s Mining Opportunity: Increasing Revenues, Improving Legislation

Malawi’s Mining Opportunity: Increasing Revenues, Improving Legislation

Report for Norwegian Church Aid-Malawi and Catholic Commission for Justice and Peace-Malawi (July 2013)

This report analyses Malawi’s tax revenues from mining, focusing on how legislation can be improved to ensure that Malawians benefit more from the country’s natural resources. The report finds that although mining makes up around 10 per cent of Malawi’s exports, it contributes less than 1 per cent of its total revenue. Tax incentives given to mining companies are costing Malawi at least 8 times more than the revenues received; a loss that could cover 60 per cent of the costs of the Ministry of Health.

The company managing the largest mining project in the country – Australian uranium miner, Paladin – has been given extensive tax incentives, meaning that it is paying very little in tax. Revenue losses to Malawi from the tax regime given to Paladin are calculated at $205–281 million over the 13 years of the project. It is encouraging that the government is committed to revising the mining legislation, but progress is slow and the currently proposed revision of the Mines and Minerals Act is little better than the existing Act.

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Enough Food for Everyone If…: The need for UK action on global hunger

Enough Food for Everyone If…: The need for UK action on global hunger

Report for UK NGOs (January 2013)

Curtis Research researched and wrote the first draft of this report, which outlines some of the key challenges facing the UK and other developed states relating to their policies on global hunger. The report is the launch document for a UK campaign, the successor to Make Poverty History, to change certain UK government policies on agriculture, nutrition, tax, biofuels, land grabs and policy transparency. It calls on the UK, and other G8 states, to invest in small farmers and those suffering from undernutrition, address damaging biofuels and land grabs policies, take steps to end tax haven secrecy and improve transparency of policies.

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The Hunger Games: How DFID Support for Agribusiness is Fuelling Poverty in Africa

The Hunger Games: How DFID Support for Agribusiness is Fuelling Poverty in Africa

Report for War on Want (December 2012)

This report shows that hundreds of millions of pounds of British taxpayers’ money is being used to promote projects designed to benefit some of the world’s richest agribusiness corporations and to extend their control over the global food system. DFID is at the centre of an intricate nexus of corporations and donor-sponsored institutions seeking to maximise private profit from agriculture. Personal connections play a vital role, and there is a significant ‘revolving door’ of staff between DFID and agribusiness corporations, with the personal links going beyond DFID to the heart of the UK government and its economic policy. In addition, this report reveals DFID’s involvement in a network of private enterprises and investment fund managers incorporated in the secrecy jurisdiction of Mauritius.

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Tax Incentives and Revenue Losses in Tanzania

Tax Incentives and Revenue Losses in Tanzania

Report for Tax Justice Network-Africa and ActionAid-International (June 2012)

The government of Tanzania is providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment (FDI) into the country. This study shows that such tax incentives are leading to very large revenue losses and may not be needed to attract and retain FDI. The report shows that, taking different estimates into account, revenue losses from all tax exemptions and incentives may be as high as TShs 1.8 trillion (US$ 1.23 billion) in 2008 and that the minimum revenue loss from tax incentives granted to companies alone is around TShs 381 billion ($174 million) a year (for the years 2008/09 – 2009/10). Thus Tanzania is being deprived of badly-needed financial resources for financing public expenditure of goods and services. If the public revenue lost through tax incentives were spent on education and health, the education budget would increase by more than a fifth and the health budget by more than two-fifths.

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Tax Incentives and Revenue Losses in Kenya

Tax Incentives and Revenue Losses in Kenya

Report for Tax Justice Network-Africa and ActionAid-International (June 2012)

The government of Kenya is providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment (FDI) into the country. Yet this study shows that such tax incentives are leading to very large revenue losses and are anyway not needed to attract FDI. Recent government estimates are that Kenya is losing over KShs 100 billion (US$ 1.1 billion) a year from tax incentives and exemptions. Of these, trade-related tax incentives were at least KShs 12 billion (US$ 133 million) in 2007/08 and may have been as high as US$ 566.9 million. Thus the country is being deprived of badly-needed resources to reduce poverty and improve the general welfare of the population. In 2010/11, the government spent more than twice the amount on providing tax incentives (using the figure of KShs 100 billion) than on the country’s health budget – a serious situation when 46% of Kenya’s 40 million people live in poverty (less than US$ 1.25 a day).

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The One Billion Dollar Question: How Can Tanzania Stop Losing So Much Tax Revenue

The One Billion Dollar Question: How Can Tanzania Stop Losing So Much Tax Revenue

Report for Norwegian Church Aid and Churches in Tanzania (June 2012)

This report analyses Tanzania’s tax policies and how much revenue the country is losing from tax evasion, capital flight and tax incentives. It shows that, every year, a vast amount of potential tax revenue that could be used to reduce poverty is failing to end up in the government treasury; much is simply leaving the country. Illicit financial flows from Tanzania – which entail the disguised expatriation of money abroad, usually to developed countries or tax havens – range from $94 – 660 million a year. In total, and including further revenue losses from tax incentives and various forms of tax evasion, the report estimates that Tanzania has in recent years been losing revenues ranging from $847 million – $1.29 billion (TShs 1.35 – 2.05 trillion) a year – thus the median figure is $1.07 billion (TShs 1.7 trillion).

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Tax Incentives and Revenue Losses in Uganda

Tax Incentives and Revenue Losses in Uganda

Report for Tax Justice Network-Africa and ActionAid-International (April 2012)

The government of Uganda is providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment into the country. Yet this study shows that such tax incentives are leading to very large revenue losses and are anyway not needed to attract FDI. Losses from tax incentives and exemptions amounted to around UShs 690 billion (US$ 272 million) in 2009/10 – nearly twice Uganda’s entire health budget.

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Tax Competition in East Africa: A Race to the Bottom?

Tax Competition in East Africa: A Race to the Bottom?

Report for Tax Justice Network-Africa and ActionAid-International (April 2012)

Governments in East Africa are providing a wide range of tax incentives to businesses to attract greater levels of Foreign Direct Investment into their countries. Such incentives include corporate income tax holidays, notably in Export Processing Zones, and reductions from the standard rate for taxes such as import duties and VAT. Yet this study, which focuses on Kenya, Uganda, Tanzania and Rwanda, shows that such tax incentives are leading to very large revenue losses for governments, are promoting harmful tax competition in the region, and are anyway not needed to attract FDI. In total, Kenya, Uganda, Tanzania and Rwanda are losing up to $2.8 billion a year from all tax incentives and exemptions. Not all these exemptions are bad, since some – such as VAT reductions – can help the poor. But much of the revenue loss is explained by tax incentives provided unnecessarily to attract foreign investment. These revenue losses are depriving countries of critical resources needed for reducing poverty.

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