When the Co-operative Bank recently introduced a new ethical policy, some important aspects were reported - but not tax. We can correct that oversight.
The policy states: "We will not finance organisations that take an irresponsible approach to the payment of tax in the least developed countries."
It is explained as follows: "One of the most effective ways that businesses can contribute to poverty reduction is to pay income tax in developing countries.
"The exploitation of tax havens by multinational corporations operating in the least developed countries is particularly harmful.
"We will withhold finance to those businesses that avoid paying tax in the least developed countries through the use of tax havens."
This commitment is to be applauded. As Christian Aid, Tax Justic Network and others have pointed out, tax havens cost the poorest countries hundreds of billions in legal and illegal capital flight - more than they receive in aid.
But note how circumscribed the Co-operative Bank's statement is. What if, instead of referring just to developing countries, it promised investment only in companies that don't avoid tax in ALL countries?
The sad truth is that no bank, however ethical, could make such demands without disqualifying itself from lending to larger companies, so prevalent is tax avoidance.
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