Developing Countries Struggling To Cope With COVID-19

By Anis Chowdhury and Jomo Kwame SundaramSYDNEY and KUALA LUMPUR, Feb 23 2021 (IPS) The ongoing COVID-19 pandemic is adversely impacting most developing countries disproportionately, especially the United Nations’ least developed countries (LDCs) and the World Bank’s low-income countries (LICs). Years of implementing neoliberal policy conditionalities and advice have made most developing countries much more vulnerable to the COVID-19 pandemic by undermining their health systems and fiscal capacities to respond adequately. Anis ChowdhuryLess taxes Four decades of ‘neoliberal’ policy influence has resulted in a ‘race to the bottom’ to cut direct taxes, particularly corporate tax rates, ostensibly to promote investments and spur growth. But most LDCs and LICs were left high and dry as foreign direct investment (FDI) seeks profitable locations considering various relevant criteria besides tax rates. Thus, tax cuts have not induced the promised investments, but also resulted in net revenue losses. Revenue loss due to such tax competition could be five times that due to illicit financial flows seeking to evade taxes. Low and middle-income countries lose US$167~200 billion annually, around 1.2~1.5% of their national incomes, to corporate tax competition. Poor countries’ tax bases have narrowed since the 1990s, with Sub‐Saharan African countries suffering the highest revenue losses as a share of national incomes. More indirect taxes have not compensated for less ...
Source: IPS Inter Press Service - Health - Category: International Medicine & Public Health Authors: Tags: Development & Aid Economy & Trade Financial Crisis Global Headlines Health Humanitarian Emergencies Poverty & SDGs TerraViva United Nations Jomo Kwame Sundaram & Anis Chowdhury Source Type: news