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The One Billion Dollar Question: Revisited

Report for Norwegian Church Aid (May 2017)

In 2012, the Tanzania Episcopal Conference, National Muslim Council of Tanzania and the Christian Council of Tanzania jointly published a report written by Curtis Research which estimated that Tanzania was losing revenues of between $847 million and $1.3 billion a year from a mix of tax evasion, tax incentives and capital flight. New research presented here shows that Tanzania continues to lose a vast amount of resources every year – in fact, these losses are if anything increasing. The research estimates that Tanzania is now losing around $1.83 billion a year from tax incentives, illicit capital flight, the failure to tax the informal sector and other tax evasion. The country is losing a further $1.3 billion (TShs 2.9 trillion) from corruption in the national budget, which diverts resources away from funding critical public services.

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Categories: Mining, Tax

Domestic Tax and Education

Report for ActionAid and International Commission on Financing Global Education (November 2016)

This report, part-written by Curtis Research, outlines how increased taxation in developing countries should fund public education. The task is urgent given that 121 million primary or lower secondary age children are out of school while 250 million children who are in school but not learning. Many tax incentives provided by developing country governments cause far more harm than good. First, and most importantly, they can massively reduce government revenues by removing the requirement for companies to pay fair levels of tax. Second, they can encourage corruption and secrecy when negotiated in highly discretionary ‘special deals’ with individual companies. Third, they mainly attract ‘footloose’ firms which move their investments from one country to another, and therefore do not encourage stable long term investments. Fourth, where they favour foreign investors, they can disadvantage domestic investors and deter them from entering markets or expanding. The ostensible reason for governments providing tax incentives to business is to attract foreign direct investment (FDI), yet the evidence suggests that tax incentives are not needed to attract FDI. There are four types of incentives that are particularly problematic: discretionary incentives, tax holidays, tax incentives in free trade zones and stability agreements. Developing countries are estimated to lose US$139 billion a year just from one form of tax incentive – corporate income tax exemptions. This could easily fill the annual global finance gap for basic education.

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Categories: Education, Tax

Development Finance Institutions and Responsible Corporate Tax Behaviour

Report for Oxfam IBIS (Denmark) and other NGOs (November 2016)

This report, written with Sara Jespersen of Oxfam IBIS, finds that Development Finance Institutions (DFI) are not doing enough to avoid becoming accomplices in harmful corporate tax practices. It highlights the role DFIs should play in promoting responsible tax practices by companies. DFIs are largely failing to use their influence as investors in companies operating in developing countries to ensure that those companies restrict or eliminate their use of tax havens or to reduce the risk of corporate tax avoidance. While others have taken important steps forward. There is a particular need for DFIs to play this role, given the scale of global tax dodging, the fact that DFIs largely use public money and since DFI investments in developing countries are significantly increasing.

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Categories: Aid, Companies, Tax

The New Colonialism: Britain’s Scramble for Africa’s Energy and Mineral Resources

Report for War on Want (July 2016)

This report reveals the degree to which British companies now control Africa’s key mineral resources. It reviews the operations of all the companies listed on the London Stock Exchange (LSE) that have mining interests in Africa, focusing on key minerals and metals such as gold, platinum, diamonds, copper, oil, gas and coal. It finds that 101 companies have mining operations in 37 sub-Saharan African countries. These companies, which are mainly British, now control an identified $1.05 trillion worth of resources in Africa in just five commodities — oil, gold, diamonds, coal and platinum. Of the 101 LSE-listed companies, one quarter are incorporated in tax havens. A determination to plunder the natural resources of Africa is taking place, with the active support of the British government; this is contributing significantly to a net drain of resources from Africa, already the world’s poorest continent.

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Categories: Companies, Foreign Policy, Mining, Tax, UK

Still Racing Toward The Bottom? Corporate Tax Incentives in East Africa

Report for ActionAid and Tax Justice Network Africa (June 2016)

In 2012, ActionAid and Tax Justice Network Africa published a report estimating that East African countries were losing revenues of up to US$2.8 billion a year by providing tax incentives. The 2012 report received – and continues to receive – widespread attention from the media and governments. This new report assesses what progress has been made since 2012 in reducing these tax incentives, and outlines mixed findings. On the one hand, governments have taken some positive steps to reduce VAT-related incentives, which are increasing tax collections and providing vital extra revenues that could be spent on providing critical services. On the other hand, they are still failing to eliminate all unnecessary tax incentives, including corporate income tax incentives given to corporations. Precise figures are impossible to provide due to a lack of transparency, but the evidence gathered suggests that four East African countries could still be losing around US$1.5 billion and possibly up to US$2 billion a year.

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Categories: Companies, Tax

Improving South Africa’s Mining Revenues and Transparency

Report for Economic Justice Network of FOCCISA, South Africa (October 2015)

Taxes from mining contribute significantly to South Africa’s economy. Yet the country’s mining sector is insufficiently transparent while companies’ use of tax havens increases the risk of illegal tax evasion and tax avoidance. Together with generous tax incentives given to mining companies, the effect is to reduce revenues to the state. There is a growing sense in South Africa that the minerals in the ground belong to the people and that they should contribute even more to national economic development. This briefing suggests that South Africa could and should raise more revenue from mining by taking action nationally and internationally to review its tax policies and help break open the financial secrecy of tax havens.

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Categories: Mining, Tax

TTIPing Away the Ladder: How the EU-US Trade Deal Could Undermine the Sustainable Development Goals

Report for Trade Justice Movement (September 2015)

The United Nations has developed a set of Sustainable Development Goals (SDGs) that world governments are expected to use to frame their political policies over the next 15 years. At the same time, the world’s two largest trading blocs – the European Union and the United States – are negotiating a major trade pact – the Transatlantic Trade and Investment Partnership (TTIP) – aimed at achieving ambitious cuts in trade barriers and investment regulations. This briefing argues that these two processes are incompatible and that TTIP could undermine the world’s ability to achieve the SDGs. Developing countries have not been involved in the TTIP negotiations – a scandal in itself – but TTIP will revise trade and investment rules between the US and EU that are very likely to become global standards; these will undermine developing countries by further forcing open their markets to US and European companies.

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Categories: Climate, Health, Tax, Trade

The West African Giveaway: Use and Abuse of Corporate Tax Incentives in ECOWAS

Report for ActionAid International (August 2015)

Curtis Research part-wrote and contributed research to this report, which examines the use of tax incentives in West Africa, focusing on Nigeria and Ghana. Corporate tax incentives are fiscal provisions offered to investors, and include reduced corporate tax rates or full ‘holidays’, permitting companies to pay less tax on their profits than normal, or to benefit from reduced or no tax on services such as water, electricity or land. Tax incentives are used by governments in the belief that they will help attract foreign direct investment into their countries, but evidence shows this to be rarely the case. The analysis shows that Ghana is likely losing up to $2.3 billion a year, Nigeria around $2.9 billion and Senegal (in 2009 at least) up to $639 million. If the rest of ECOWAS lost revenues at similar percentages of their GDP, total revenue losses among the 15 ECOWAS states would amount to $9.6 billion a year.

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Categories: Companies, Tax

Health Spending, Illicit Financial Flows and Tax Incentives in Malawi

Joint article in Malawi Medical Journal with Bernadette O’Hare (University of St Andrews, Scotland / College of Medicine, University of Malawi) (November 2014)

Malawi suffers from a high disease burden, with one of the highest maternal mortality rates in the world and with more than 1 in 9 children dying before their fifth birthday. This article examines Malawi’s health spending in light of the the revenues it loses through providing tax incentives and through illicit financial flows. Malawi needs to spend around $530 million each year to provide a minimal health package for all its citizens, yet government and donors are spending only around $400 million. At the same time, Malawi is losing nearly $400 million a year from the provision of tax incentives and lost tax income from illicit financial flows out of the country. If these lost revenues were recovered, Malawi could pay for a minimal health package from its own resources. (The weblink to this article is here)

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Categories: Health, Mining, Tax

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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Categories: Climate, Companies, Food & Agriculture, Health, Tax, Trade

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