Peter Power (Limerick East, Fianna Fail)

The Nairobi declaration on taxation and development is an important statement of concern by civil society actors in Africa on the interrelated issues of domestic taxation, revenues from natural resource extraction and international taxation. These issues have been prominent on the international agenda recently as a result of efforts at United Nations, OECD and European Union levels, with the full participation and support of the Government.

Domestic revenue raises around ten times more financing for Africa than development assistance. For developing countries in Africa, the mobilisation of domestic resources through efficient and fair tax systems is crucial for sustainable growth, poverty reduction and the provision of services so that the millennium development goals can be achieved. Efficient and fair tax systems are also essential for promoting democracy and state legitimacy because taxpayers are more likely to hold their governments to account.

Capital flight, including tax evasion and avoidance, and illicit financial flows are a major obstacle to domestic resource mobilisation. A report recently commissioned by the Norwegian Government found that illegal money flows from developing countries are at least seven times higher than official development assistance. This is facilitated by tax systems vulnerable to harmful tax practices and unco-operative jurisdictions, and it requires joint efforts between developed and developing countries.

I welcome the recent European Commission communication on tax and development which charts the way forward for the EU in addressing these issues. Enhanced efforts will be made to strengthen support to domestic resource mobilisation in developing countries . The OECD, through collaboration between the committee on fiscal affairs and the development assistance committee, has an important role to play in ensuring developing countries get a fair share of taxes in a more transparent international tax environment. The Government is participating fully in these OECD efforts through the Department of Finance and Irish Aid, which are collaborating on the issues of concern.

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