Christian Aid, African Union Report Tax Avoidance

The African Union reports that more than $150bn (£75bn) a year is looted from Africa through tax avoidance by giant corporations and capital flight using 'a pinstripe infrastructure' of western banks, lawyers and accountants.

The shortfall obscures pledges made by leaders of the world's richest nations to increase aid and write off debt at the G8 summit in Gleneagles in 2005.

It is estimated that about 30 per cent of sub-Saharan Africa's annual GDP has been moved to secretive tax havens, many under the jurisdiction of the British government.

The plundering acts, in which western companies and financial firms are complicit, have been revealed at the recent launch in Nairobi of a pan-African campaign group, the Tax Justice Network for Africa (TJNA). The TJNA is to investigate multinational tax avoidance and abuses of tax havens by corrupt African politicians on a country-by-country basis, as well as lobby global leaders to commit to a proper crackdown.

Alvin Mosioma, the TJNA's first coordinator, said: "It is astonishing that the World Bank and International Monetary Fund have not researched capital flight and tax. Until now these issues have not been included within the debate on poverty alleviation. We will publish precise information about tax avoidance in African countries and focus on the role of multinationals. Our message is that tax justice will improve democracy."

Despite the global commodity boom over the past three years, African governments are missing out in increasing tax and royalties, and in some cases are actually receiving less revenue from mining companies than before, a report revealed.

As production of copper, gold, nickel and platinum soars, research from Christian Aid will show that the Tanzanian government's revenue from gold fell by nearly a third once the rise in prices has been factored in.

Zambia saw revenues from copper halve. Pressure from the IMF to privatise industries on advantageous terms to mining firms is responsible for the shortfall, say campaigners: "The myth that tax rates have to be slashed to attract overseas investment needs to be challenged," said Anna Thomas, Christian Aid's policy manager.

There is also concern at how so-called transfer pricing techniques, otherwise known as profit-laundering, are deployed by giant firms in extractive industries to massage down their profits.