Tuesday, July 24, 2007

Capitalist Leeches

Capitalism has only one remit - maximise and accumulate profits . Investment abroad is done not out of goodwill to benefit local people but to achieve a return for shareholder .

It comes as no surprise to socialists that BBC Radio 4's File on 4 has learned that almost £100 billion a year is taken out of Africa through accounting practices , both legal and illegal , - several times what the continent receives in aid.

Because of the way Kenyan tax laws have evolved, foreign companies can quite lawfully contribute very little in the way of taxes to the country's economy . Some international companies have been found to have acted illegally .

Kenya's official export statistics say almost 50 million kilos of tea left there in 2005 bound for Britain. But the British import statistics showed 75 million kilos - one and a half times as much - arriving here from Kenya. Companies shipping tea to the UK were under-reporting exports in order to avoid paying tax.

There is also widespread under-reporting of profits by flower companies, many of which are owned by Europeans. If you do not declare the full value of income that you have earned as a business, it means you are underpaying taxes - a practice known as "transfer pricing" - the means by which firms value their goods for tax purposes when they move them across international borders. In effect, this allows companies to undervalue their products when they leave Kenya and to place their profits elsewhere . File on 4 found there were also perfectly legal accounting practices which allowed British firms to register their profits outside Kenya.
Britain's acting High Commissioner to Kenya, Ray Kyles, said it was not the job of foreign governments to encourage their corporate investors to pay tax.

Christian Aid said this capital flight amounted to "the looting of the continent".

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