Michael Kitt (Galway East, Fianna Fail)
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Question 45: To ask the Tánaiste and Minister for Foreign Affairs if he has received representations from non-governmental organisations on their concerns at the low capacity of developing countries to implement fair and effective tax collection systems; if an estimate is available on the loss of money from developing countries due to tax avoidance and evasion; and if he will make a statement on the matter. [5563/11]

Jan O'Sullivan (Limerick City, Labour)
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Efficient and fair tax systems in developing countries are essential for sustainable growth, poverty reduction, and the provision of services so that the Millennium Development Goals (MDGs) can be met. They also help in promoting democracy and state legitimacy, since tax payers are more likely to hold their governments to account. This is why building government systems, including tax and other systems of good governance, is such an important pillar of Ireland's overseas aid programme, Irish Aid.

I welcome the growing interest in, and representations from non-governmental organisations on, the importance of building fair and transparent government systems.

Tax avoidance and evasion is a major issue for developing countries. It is difficult to estimate the exact cost to state exchequers in all developing countries. According to the Oxford University Centre for Business Taxation, reported estimates of revenue losses suffered by developing countries range between approximately US $35 billion and US $160 billion per year.

However, there are also grounds for optimism. First and foremost, governments of developing countries are seeing domestic revenue mobilisation in a new light. The uncertainty created by the global economic crisis has underpinned the realisation that it is primarily fair and efficient taxation that will meet the revenue needs of developing countries. The formation of the African Taxation Administrators Forum (ATAF) by revenue authorities across Africa, supported by our overseas development programme, Irish Aid, is playing an important role in building capacity in that regard.

These efforts are being reinforced by a growing international consensus around taxation and development. The G8 and the G20 have made considerable advances with the assistance of the Organisation for Economic Co-operation and Development (OECD), the International Monetary Fund and others towards addressing illicit capital flows and tax evasion. The EU has also adopted, with Ireland's support, an action plan to support tax administration and reforms in developing countries.

I am also happy to note that a comprehensive Tax and Development Programme was recently launched, with the active engagement of OECD members, including Ireland, developing countries, non-governmental organisations, civil society and business. This Programme will respond to the new opportunities for more international tax transparency, and work towards an enhanced enabling environment for developing countries to collect tax revenues and to build effective states.

Finally, Ireland is supporting through our aid programme a number of other important initiatives aimed at strengthening tax systems in Africa. This includes support for regional efforts such as AWEPA's work with the East African Community Customs Union. The very fruitful collaboration between the Irish Revenue Commissioners and the Rwanda Revenue Authority is also being supported. More generally, our partnership with the Irish Aid Programme Countries places an emphasis on strengthening the management of public finances and ensuring that revenues raised are used effectively and efficiently to tackle poverty.