We’re all wearily familiar with the ritual incantations that it’s those nasty multinationals that dodge taxes in developing countries and that therefore little babies die. This is not, despite the frequency of those incantations, actually true. The extremely impressive researcher, Maya Forstater, has rather more of the truth for us here:
Nevertheless if current estimates are best we have to go on, they should at least be communicated clearly. One thing that becomes clear once you take away all the showmanship of the killer facts is that the estimates commonly used are simply not that much money. Global numbers in billions are hard to comprehend, but we can make honest and clear efforts to make sense of them on a country-by-country basis. According to the data that ONE sent me (which uses PWC data on national tax rates to estimate the tax revenue losses associated with GFI illicit flows estimates) it looks like most countries where aid contributes a significant proportion of government budgets have estimated trade related tax losses in the region of 15% or less of aid receipts. Not nothing, but not the grand problem-solving amounts we are led to believe.
If you look at what this amounts to on a per capita basis (based on the ONE data and my calculations), Bangladesh could raise $2.77 extra tax for each of its citizens, Ethiopia $6.81, India $9.31and China $4.14. That is dollars; single dollars. Per person. Per year.
We thoroughly recommend reading her whole piece in full. Maya’s forte is to take these various reports from the various usual suspects and then drill down into the actual numbers and assumptions that they are making and test the veracity of them. An earlier success of hers was pointing out that estimates that Zambia had been diddled out of $10 billion in copper revenues was based on the pricing structure of 2 tonnes (yes, just two tonnes) of samples that had been sent out. Thus over-estimating the correct copper revenues by a factor of five (the very boring technical detail which I was able to help with subsequent to that article is that samples cost more than production lots. Largely because customs data on pricing (which is where the prices came from) includes the cost of transport in said customs pricing. So if you send someone 20 kg of copper as a sample through DHL the customs price for that 20 kg includes the DHL package costs. Which is, as we all know, rather higher per kg than the transport costs of 10,000 tonnes of copper on a ship).
It’s important for us to recognise all of this: and Forstater’s major point here is that these numbers we’re being fed about the impact of tax losses on developing countries simply are not true.