Lax tax rules in developing countries hinder aid, Clinton says

Jun 1 2011

In a speech to the OECD last week, Secretary of State Hillary Rodham Clinton said that foreign aid is undermined by lax tax enforcement systems in developing countries and their wealthy citizens who avoid paying taxes, Agence France-Presse reports.

"Many wealthy people in low-income countries avoid taxes by hiding their money off-shore - an outflow that by some estimates comes to more than $1 trillion every year," Clinton said. "Corruption and poorly functioning tax systems put a strain on our partnerships with developing countries," she added. "It is difficult to ask our taxpayers to spend money abroad while elites turn their backs on their own people. As donor countries make our assistance more effective, recipient countries must do their part as well" (5/26). USAID Administrator Rajiv Shah also made some remarks at the meeting, according to a USAID press release. "Shah noted that the United States has been actively elevating global development - based on the idea that with a coordinated approach issues like hunger and food security, infectious diseases, and other threats to humanity and global security can be addressed," the release states (5/27).