Tea Time for Change

This post was written by Salman Shaheen on June 13, 2011
Posted Under: Capitalism,Charity,GreenFeed,International,Poverty,Protest,Sarah Palin

A version of this article was first published in International Tax Review

Bongo players, Robin Hood, men dressed as drag dinner ladies and Mrs Doyle from Father Ted proclaiming the only tea she does not like is poverty greeted activists as they filed into Westminster Central Hall to lobby their MPs. But behind the fun and frolics of Tea Time for Change, organised by seven of the UK’s leading development agencies, was a serious message. The government must act to shore up aid, crack down on tax avoidance and push for a Robin Hood tax on financial transactions to help the world’s poorest people.

Tax justice

“It’s a scandal every day that 850 million people are going hungry,” said Chris Bain, director of CAFOD, which helped organise the event. “But aid alone won’t enable us to end global poverty. Developing countries need sustainability.”

It is for this reason that tax was such a central focus of the event, which attracted 131 MPs, and activists welcomed International Development Secretary Andrew Mitchell’s positive words on the subject.

“Everyone should pay their taxes due,” said Mitchell. “We champion transparency.”

Mitchell told the audience that the government is working in Rwanda and the occupied Palestinian territories to help them build the capacity necessary to ensure companies are not avoiding taxes.

Mitchell’s opposition counterpart, Harriet Harman, was even more forceful in talking about the role of multinational companies in development, pointing out that developing countries lose more through tax avoidance than they receive in aid.

“Many developing countries are rich in natural resources – in oil, diamonds, and precious metals – but their people go hungry,” Harman said. “Businesses can play a major part in helping development. But they can also be an ugly force for exploitation – the unacceptable face of global capitalism.”

Harman urged the government to act to ensure companies play their part in development and backed the Publish what you Pay campaign.

“We want the government to require companies to show what they pay in the developing world – country by country,” said Harman. “So that the world can see whether the relationship between a multibillion dollar multinational and a poor country is fair. And so that the people in that country can see that too – and hold their leaders to account.”

Chris Jordan, an economic justice campaigner at ActionAid, one of the charities behind the event, welcomed the government accepting the principle of transparency in the extractive sector, but argued that it should be wider.

“The government needs to take tangible steps before the G20, there’s no reason why transparency shouldn’t apply to all sectors,” Jordan told International Tax Review.

Financial transactions tax

Mitchell was positive on the possibility of a FTT and he stressed that using revenue from a new tax to finance development goals would not replace Britain’s commitment to spending 0.7% of its national income on aid.

“The Treasury is warm to this approach and it is looking at means to raise additional income,” Mitchell said, pointing to the report Bill Gates is preparing for French President Nicolas Sarkozy on financing for development. “We are looking at all the ways.”

Harman also supported taxing the financial sector to fund development.

“We back the demand that within Europe, in the G8 and in the G20, the Prime Minister leads on how we make the financial sector play its part in extra finance for development to tackle global poverty and climate change,” said Harman.

Campaigners were encouraged by the arguments heard from the government and the opposition.

“We welcome that the government is warming to a Robin Hood tax,” said Jordan. “We want to see those warm words turned into a commitment. Lots of the technical work has already been done, there’s no reason to delay.”

The benefits of a FTT for development, given its ability to raise large amounts of revenue with a tiny rate because of the breadth of the tax base, are obvious. So too are the difficulties. The European Commission, while giving its support to the FTT, said that it is something that needs to be implemented on a global level.

“It’s going to be most effective if it’s international, but there’s no reason why countries can’t go it alone,” said Jordan. “The concept is feasible, we already have a share transactions tax in the UK.”

The mood on the day was upbeat, with more than 1000 activists clearly excited to be drinking tea with their MPs and talking to them about tax and development. And despite the levity of the event, personified by Spitting Image comedian Jan Ravens impersonations of Sarah Palin – “When I heard there was a tea party I just had to come” – no one was in any doubt as to the gravity of the issues as the charities prepare to step up their campaign ahead of the G20 meeting in November.

“I want to share an African proverb because to me it sums up why you are here,” said Adwoa Kwateng-Kluvitse, country director for ActionAid Ghana. “When spiders webs unite they can tie up a lion.”

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