British taxpayers fork out £45m in foreign aid to paradise islands that charge NO TAX

BRITISH taxpayers forked out £45million in foreign aid spending to countries classed as tax havens in just one year, it emerged today.

Nations such as Belize, Marshall Islands, Seychelles and Vanautu – which are all included on a European Commission ‘blacklist’ of international tax havens – have all received cash handouts from the UK Government.

Under a controversial new law introduced by the Prime Minister, Britain is legally obliged to spend 0.7 per cent of Gross Domestic Product (GDP) on foreign aid spending.

However, critics of the foreign aid commitment reacted with fury after it was revealed millions are being handed over to countries that set minimal or even zero tax rates.

An investigation by the Independent found that, for example, more than £1.8million of UK cash was given to the paradise Caribbean island of Anguilla in 2013.

This is despite the nation – which has an estimated population of less than 15,000 – charging no income, capital gains or any other form of direct taxes on residents or companies, with it described as a “zero-tax jurisdiction”.

In total, 13 countries included on the tax haven blacklist received £45million in Overseas Development Assistance handouts in 2013, the most recent year for which aid spending figures are available.

These nations are Anguilla, Antigua and Barbuda, Belize, Grenada, Liberia, Maldives, Marshall Islands, Mauritius, Montserrat, Panama, Seychelles, St. Vincent & Grenadines and Vanuatu.

Earlier this month, Chancellor George Osborne repeated a promise to crackdown on international tax havens, which lose Britain billions in tax revenue each year.

John Christensen, director of the Tax Justice Network, blasted Britain’s foreign aid spending in tax havens as “incoherent”.

He told the newspaper: “Donor countries need to pay far more attention to whether aid-recipient countries are making sufficient effort to tax their wealthy citizens and tackle corporate tax avoidance.

“Tackling tax dodging is an important step towards reducing reliance on aid and external debt.”

Jonathan Isaby, chief executive of the TaxPayers’ Alliance, said: “We spend too much taxpayers’ money on overseas aid and have taken the ludicrous decision to ringfence it too so bigger spending reductions have to be made elsewhere.

“We need to rethink our entire approach to aid and ensure it is going to the world’s poorest and making their lives demonstrably better.”

The Department for International Development (DfID) confirmed it oversaw spending in three of these countries, with spending in the other ten countries funded by separate Government departments.

A spokesperson said the Government has international obligations to Montserrat as an British Overseas Territory, while spending in Liberia and Vanautu was to combat extreme poverty.

They added that Britain was leading the way in helping developing nations get their tax systems in order.