Tax in developing countries: increasing resources for development inquiry launch

13 December 2011

The link between taxation and development is fundamental. The failure to collect tax in developing countries is therefore a major concern. Poor revenue collection of property, wealth, income and sales taxes leaves developing countries with highly constrained budgets for the provision of basic services and poverty reduction.  It also represents a missed opportunity to redistribute wealth and improve governance

Developing countries lose an estimated $160 billion each year through tax avoidance by multinational companies (including those based in the UK). Of particular concern are the extractive industries where payments to governments are often not disclosed and may not contribute to development or poverty reduction.

The International Development Committee is to begin an inquiry into tax in developing countries. The Committee will use Zambia as a case study due to its aid dependence (18% of the Government’s budget), high poverty levels (64% of the Zambian population live below the poverty line) and the large mining sector. The UK’s Department for International Development (DFID) is spending £59 million in the country each year until 2015.

Key issues for the inquiry include:

  • how DFID can better support developing countries to improve revenue collection
  • how DFID can support developing countries to use the revenue base responsibly in order to improve service delivery and development outcomes
  • tax evasion and avoidance in developing countries by private individuals and companies
  • how effective international efforts to promote tax disclosure and transparency are likely to be
  • capital flight and its implications for developing countries

The deadline for submitting written evidence is Monday 6 February 2012.

Written evidence submitted should:

  • Be no longer that 3000 words in length
  • Be provided electronically in MS Word (no PDFs e-mail to Submissions can also be sent by post to International Development Committee, House of Commons, 7 Millbank, London, SW1P 3JA.

View guidance on giving evidence to Select Committees. 

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