UK aid: The revelation will anger Tory backbenchers who have criticized David Cameron for committing to spend 0.7 per cent of the national income on aid every year
- UK paid out £45m to 13 countries on tax haven ‘blacklist’ in just one year
- Campaigners estimate use of offshore havens costs Treasury £18b a year
Although huge amounts of international money flow through global tax havens, many still rely on payments from other countries to fund services and infrastructure because their tax systems collect so little.
The revelation will anger Tory backbenchers who have criticised David Cameron for committing to spend 0.7 per cent of the national income on aid every year. They will say it is wrong that Britain is giving aid to countries that do not raise enough in tax to pay for public services yet are often used by multinationals to avoid paying UK taxes.
The investigation, published in The Independent, found British aid funds have been used to build an airport in Montserrat, and set aside to pay for roads and ports in Belize, Antigua and Barbuda, and St Vincent and the Grenadines.
More than £1.8million has been sent to Anguilla, which has no income tax, capital gains tax, or corporation tax and is described by the accountants Deloitte as a ‘zero-tax jurisdiction’.
Ministers say British aid to the Caribbean nation, which has a population of 17,000, is being used to fund training in, among other things, financial services. John Christensen, director of the Tax Justice Network, said: ‘There is an obvious lack of policy coherence when development assistance is being provided to countries that deliberately choose to set low or zero tax rates on corporate profits, or offer hugely expensive tax exemptions, but can’t afford to provide even basic public services like health, security and education to their citizens.
‘Donor countries need to pay far more attention to whether aid-recipient countries are making sufficient effort to tax their wealthy citizens and tackle corporate tax avoidance. Tackling tax dodging is an important step towards reducing reliance on aid and external debt.’
Chancellor George Osborne has repeatedly vowed to crack down on overseas tax havens, setting down new penalties for firms and individuals that artificially shift wealth offshore.
Other countries judged to be acting as tax havens by the European Commission include Liberia, one of the poorest nations in the world, where the UK has stepped in to assist with the funding of health services.
A spokesman for the Department for International Development said countries where its aid was directed tended to be very poor.
Only three of the countries’ aid came from the DfID budget. She also said the UK has an international obligation to assist economic development in British Overseas Territories, which include Montserrat.