By Francesca Giubilo,
Members of parliament from Africa, the Caribbean and the Pacific (ACP) and Members of the European Parliament supported key Eurodad demands on tax when they adopted a resolution on the social and environmental impact of mining in developing countries at the Joint Parliamentary Assembly (ACP-EU JPA), in Denmark end May. The resolution stresses the need to fight the culture of secrecy as well as tax evasion and money laundering.
Research conducted by Christian Aid shows that mining in Africa is systematically under-taxed, as a result of tax avoidance and evasion; discretionary and opaque concessions, and poorly designed tax exemptions. Therefore Eurodad welcomed that all the EU-ACP JPA expressed concern about the negative aspects of resource extraction and foreign investors’ practises and called for policy reforms in this field.
Since the presentation of the working document in October 2011, this text has triggered a strong debate amongst Parliamentarians. The resolution analyses the impact of mining in different countries, focusing on issues such as child labour, land grabbing, sustainable growth and in particular financial transparency. Thanks to its direct link to the fight against tax dodging, poverty, and corporate practice, transparency is a core part of Eurodad proposals as well. It is considered a starting point to achieve more sustainable development and improve the lives and rights of people in developing countries as well as to tackle corporate tax dodging and ensure corporations pay their fair share of tax.
Importantly, the Parliamentarians welcome “the European Commission's proposals to amend the Transparency and Accounting Directives requiring EU publicly-listed companies as well as large unlisted companies active in the extractive industry and the logging of primary forests to report on a country-and-project basis the payments they make to local, regional and national governments in third countries. (Par.11)
Although this is welcome and a necessary step, Eurodad would like to see companies active in other sectors report on a country by country basis as well, and not only on payments to governments, but on a wider range of information such as production volumes, sales and profits. It is therefore extremely welcome that the JPA also considers the important role that tax plays for development and calls on their governments, in their respective capacity, to present a legislative proposal on the automatic disclosure of transnational corporations' profit and tax payments in each individual developing country in order to bring an end to tax havens, tax evasion and illicit capital flights. (Par.12)”. This increased transparency would allow the government to hold the company accountable for paying correct taxes and civil society organisations to hold governments responsible for spending.
The Eurodad Charter on Responsible Finance sets out specific clauses that should be included in investment contracts with developing countries in order to ensure investment, whether in mining or any other sector benefits rather than harms the host countries and communities. This can be of great help for parliamentarians wanting to change legislation in their countries to put a stop to opaque business cultures. With the same aim, a new dialogue has also been launched by Eurodad jointly with our sister networks Afrodad and Latindadd in order to increase awareness amongst parliamentarians on capital flight and responsible finance.
According to the ACP-EU JPA rules of procedure, the resolution shall be forwarded to the European Commission and the ACP-EU Council of Ministers, which should report on follow-up to adopted resolutions at the next session of the Assembly.
Although the resolution still has a long way to move forward, this is a sign that something might be changing in the mindset of the developed countries and that our fight for the use of country-by-country reporting and stronger anti-money laundering standards has an echo at international level.