The Rt Hon David Cameron, MP,
Prime Minister
27th May, 2013
Dear Prime Minister
Tanzania has had a long and productive relationship with the UK as a
development partner. Tanzania is one of the top recipients of aid from UK
mainly through DFID on the African continent. In recent years, the UK has
helped Tanzania to establish and lay foundations for an accountable and
transparent government. Your country’s support to the Tanzanian parliament, our
public institutions and civil society organisations has been critical in these
efforts.
This support is, however, dwarfed when the amount that Tanzania loses
every year to tax evasion and aggressive tax avoidance in taken into account.
To large extent, these tax evasions and avoidance are done by Multinational
corporations, most of them registered in the United Kingdom. This is a constant
challenge for our country – a challenge that undermines the same foundations of
accountability that we are striving to strengthen and uphold.
A recent study produced by Global Financial Integrity (GFI) puts estimates of
illicit financial flows out of all developing countries at between $858 billion
and $1.06 trillion a year. To each 1 USD into Africa as development Aid, 10 USD
leave Africa illicitly. Experts argue that Africa is a net creditor to the
world as there is more Africa’s money stashed in Offshore than total Africa’s
foreign debt. The world must not allow this to continue. We must stop this by
crushing these secrecy jurisdictions.
Every year my country Tanzania loses USD 560 million to tax evasion and
avoidance. This is the amount that could otherwise have been used to improve
Tanzania’s infrastructure, to improve education and health services across the
country, which would have translated into and guarantee a better standard of
living for majority of citizens of this country. This amount of money of potential
tax revenues would have supported the growth of Tanzania’s economy and
contribute to the growth of future tax revenues. Between year 2002 and 2008
Tanzania lost around USD 2 Billion through illicit money transfer including Tax
evasion, tax avoidance and corruption. The loss is around 5% of Tanzania GDP.
Some of this money is held in British Overseas Territories and Crown
Dependencies. Tanzania and other developing countries in Africa have been
finding it hard to tame this trend because of financial secrecy laws.
Strong action by your government can stop this financial secrecy as maintaining
those amounts to abusing developing countries and its supporter’s struggles.
Quashing such secrecy jurisdictions would have real impact on the lives of many
poor Tanzanians, in particular and Africans in general.
In my district of Kigoma, western Tanzania, maternal mortality rate is 933 out
of every 100,000 live births. This trend is largely contributed by poor health
services. The Government is incapacitated to provide better health services
because of low revenue base. Tax havens and secrecy jurisdiction is one of the
fundamental reason for this low revenue base.
I sincerely believe that a decision by the G8 to enforce transparency laws and
regulations in regards to offshore tax havens is pivotal to supporting our
endeavours as a country to do the same. With 5% of GDP lost every year to tax
evasion and tax avoidance, Tanzania can no longer afford to ignore this
obstacle to our growth and development struggles. Neither can our development
partners.
I take this opportunity to commend your leadership in fighting tax evasion and
aggressive tax avoidance and on your decision to make it a priority for the
39th G8 summit at Lough Erne, Northern Ireland in June.
I call on you to demonstrate your leadership at the summit by putting in place
aggressive sanctions against British Overseas Territories and Crown
Dependencies which continue to provide cover for the siphoning of billions of
dollars of our tax revenue. I urge for a mandatory disclosure of details of
accounts held in known tax havens. When a government has reasonable grounds to
suspect that money held in certain jurisdictions is the proceeds of corruption,
tax avoidance or other crimes by its citizens, disclosure should be mandatory
in order to enable it recover the diverted funds.
Yours sincerely,
Zitto Kabwe, MP