ZITTO WRITE TO CAMEROON!

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