11th Plenary Session of the Leading Group on Innovative Financing for Development.
Helsinki, 7 February 2013. The Leading Group on Innovative Financing for Development held its 11th Plenary Session on 6th of February 2013 in Helsinki. Key stakeholders in development such as FAO, GAVI, NEPAD, and UNDP as well as various civil society organisations participated in the event. The Session focused on assessing innovative financing – especially through perspectives of reliability of revenues, fairness, transparency, and allocation efficiency.
Participants tackled, amongst others, the problem of illicit financial flows (IFF) both globally and in individual countries. IFF is a multifaceted problem, comprising commercial tax evasion, kleptocracy and corruption, organised crime and money-laundering.
Anne BABB, General Secretary at the International Blue Cross, stated in her speech at the Plenary Session: “Taxation is a key element for ensuring that developing countries can strengthen their economic sustainability. However, there are numerous challenges linked to taxation. As an example, I wish to cite the alcohol industry. Some companies choose to produce alcohol in developing countries to lower their burden of taxation. In most cases, these activities are legal. The problem, however, is that companies often delocalise to countries where taxation is minimal. Therefore they do not support the economy of the country. This is not all. When alcohol is largely available and easily accessible – as it is the case in many developing countries – people will consume more. Let us remember that alcohol is no ordinary commodity. Alcohol consumption may lead to addiction, which, in turn, exacerbates social exclusion. It increases the likelihood of risky behaviours, contributing to spread various infectious diseases such as HIV/AIDS. It may favour violence and cause road accidents. Today we know that the harmful use of alcohol costs societies billions in terms of health and socio-economic costs.
Is it not unfair – in particular for developing countries – if the company producing alcohol does not even benefit these societies through tax payments?
I believe that innovative financing mechanisms for development include an ethical element. Evidence shows that there is a strong need for global companies to be more transparent on taxations relating to their production chain within various countries. This would make it easier for countries concerned to track and challenge unethical activities by companies. I am very pleased to see this topic on the agenda of the Leading Group, and I look forward to seeing, and contributing to, actions which will help societies promote effective and sustainable development.”