Yesterday (5 September) the UK government took an important step forward towards creating a global tax system which can help transform the lives of the most vulnerable children.By agreeing to Caroline Flint MP’s amendment to the Finance Bill, the Government has signalled its support for public country-by-country reporting by multinational companies.
This type of public reporting would show everyone – from the general public to tax authorities – how much profit companies are making in all the places they operate. It would make it harder for companies to avoid paying their fair share of tax – something that’s especially important in developing countries which need to raise more money to spend on essential services, like education and healthcare, for children.
Why does Save the Children care about tax transparency?
As part of our global campaign Every Last Child, we want to ensure that overseas aid, given by countries like the UK, gets to the most vulnerable and marginalised children. But we also want to increase the amount of money the world’s poorest countries are able to collect, so they can invest in the public services so that every child has access to healthcare and learning.
One of the most effective ways to get that money is via tax revenue – but the complicated tax avoidance schemes used by multinational companies are causing millions of potential tax revenue to be lost each year .
As I saw when I visited Malawi earlier this year, if poor countries can access information about how much money companies are making and how much tax they are due, they could greatly increase their tax revenue.
As Caroline Flint said yesterday, “public transparency can make a real difference in ensuring fair taxation and fair play.” This additional revenue could help plug the gap between resources needed to meet Malawi’s health needs and actual health expenditure.
This is a global problem affecting every country, but the UK has the power to make a difference.
The UK government has been a firm supporter of greater tax transparency. In May, the former Prime Minister David Cameron hosted a landmark international Anti-Corruption Summit in London which generated a shared ambition among global leaders to do more to tackle corruption.
The government’s aid budget has also been used to great success in reforming tax systems in developing countries. Through a partnership with the private sector in Afghanistan, UK aid and expertise has helped increase domestic tax revenue from $230 million to $1.9 billion in the last ten years. This could pay for 10.5 million children’s schooling, 750km of new roads and 1 million patient days in hospital.
Now we need to see this new measure put into practice
The government has agreed to introduce legislation on public country-by-country reporting – but they haven’t put a timescale on it.
We now need to make sure that it happens as soon as possible. Waiting for other countries to move first would be counter-productive and could set the achievement of this essential transparency measure back by years.
The UK can continue to show global leadership on tax transparency by making progress on this measure now. In fact yesterday’s action could even set the tone for other countries to move forward and take similar steps.
Delaying the implementation of this measure could prevent children such as those I met in Malawi from getting the education and medicine’s they desperately need.
You can call on our new Prime Minister to go further in championing a fair global tax system that can raise the money to give children the healthcare, protection and education they need by signing this petition.