Eamon Gilmore (Dún Laoghaire, Labour)
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Question 9: To ask the Minister for Foreign Affairs if he supports the Nairobi Declaration on Taxation and Development of 8 April 2010 which dealt with the issues of abusive transfer flows by multinational corporations in Africa [20926/10]

Peter Power (Limerick East, Fianna Fail)
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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.

Michael D Higgins (Galway West, Labour)
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Irish Aid is of great assistance in these matters. I refer specifically to Tanzania where a new gold mine has been opened every year since 1998. A study funded by Christian Aid indicates that, between 2000 and 2008, €265.5 million in taxes were lost because of gross abuse by extractive industries. Putting this figure in context, Tanzania receives €470 million in aid in a full year.

Tanzania is the largest gold producer after South Africa, yet life expectancy is 55 years and per capita expenditure on children's education is less than $48. It is being robbed right, left and centre by extractive mining companies. The Nairobi declaration would address this sort of scandal by requiring companies to publish results in the countries in which they operate, allowing African countries to survey the extent of their minerals before they sign mining agreements and ensuring bodies such as the EU do not facilitate the declaration of bogus losses. Each of the companies involved in Tanzania declares losses of approximately €500 million per year to avoid paying taxes.

Peter Power (Limerick East, Fianna Fail)
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I share the Deputy's concerns and assure him that Irish Aid is very active on this issue. I am glad the Christian Aid report acknowledges that the Government is aware of the importance of a coherent and effective development aid response.

In regard to mineral rich countries such as Tanzania, which the Deputy cites, Uganda and Zambia, the extractive industry transparency initiative, which is part of the EU-Africa governance partnership, has been instrumental in supporting improved governance and accountability through the verification and full publication of company payments and government revenues from oil, gas and mining. Further progress on this initiative is being encouraged by Irish Aid.

The Deputy's basic point is that multinational companies use their huge capacity and the professional advice available to them to engage in abhorrent practices, including transfer pricing and false invoicing. While Irish Aid's programmes are not directly affected by these illicit practices, they have the capacity to undermine all development actors in the countries with which we work. For this reason, we need a global approach which would involve the G20, the EU and the OECD.

Michael D Higgins (Galway West, Labour)
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Does the Minister of State agree it is a pity that the Irish Aid strategy paper for Tanzania did not refer specifically to abuses by mining companies?

Peter Power (Limerick East, Fianna Fail)
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Our activities in regard to multinational exploration companies are focused through the OECD and the EU on information sharing initiatives. It is not an issue on which we must work on a bilateral basis with the countries concerned.

Michael D Higgins (Galway West, Labour)
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Perhaps we should do so.

Peter Power (Limerick East, Fianna Fail)
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While I take the Deputy's point, real progress can be made on the global and multilateral levels.