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Tax generation, economic growth and job creation will be crucial to end extreme poverty over the next 15 years, Justine Greening has said at a major development conference in Ethiopia.

The UK International Development Secretary is attending the UN Financing for Development Conference in Addis Ababa, where a new global agreement on tax reform has been signed today.

The UK launched the Addis Tax Initiative along with the US, Germany, the Netherlands, Ethiopia, Kenya and others.

Video: Better tax systems for better development

Better tax systems for better development

International Development Secretary Justine Greening said:

Job creation, economic growth and tax generation in developing countries is ultimately what success looks like in developing countries. This is because it is strong tax systems that will enable developing countries to reap the benefits of growth and build stronger health and education systems themselves.

The UK has led the way in ensuring that developing countries can have their say and take full advantage of international tax reforms. And this week we have signed up to an ambitious new global agreement to boost tax collection and clamp down on tax evasion and avoidance in developing countries.

Under the Addis Tax Initiative donor countries commit to doubling their support for tax reform in the developing world by 2020. Meanwhile developing nations commit to step up their work on tax reform to improve the fairness, transparency, efficiency and effectiveness of their tax systems.

The Initiative specifically stresses the importance of tackling domestic and cross-border tax evasion and avoidance.

The UK currently invests roughly £20 million annually in improving the tax systems of developing countries. This will double by 2020.

The Financing for Development conference, held in Addis Ababa from 13-17 July, brings together senior ministers from around the world to sign a new global agreement that will set out how the world will finance the ending of extreme poverty by 2030.

In addition to signing up to the Addis Tax Initiative, Justine Greening is announcing:

• a new programme to help Ugandan government ministries to comply with the gender equality clause of Uganda’s new Public Financial Management Act
• UK membership, with Standard Chartered, of the Sustainable Development Investment Partnership, which will help mobilise the large-scale finance required to deliver transformative change for the poorest people in the world and
• a Weather and Climate Information Services for Africa (WISER) programme to provide millions of Africans with better information about weather and climate so they can make informed decisions on, for example, planting times and crop choices.

The following countries have joined the Addis Tax Initiative: Australia, Belgium, Cameroon, Denmark, Ethiopia, European Commission, Finland, France, Italy, Germany, Ghana, Indonesia, Kenya, Korea, Liberia, Luxembourg, Malawi, Netherlands, Norway, Philippines, Sierra Leone, Senegal, Slovenia, Sweden, Switzerland, United Kingdom, and the United States.

Background

The new tax initiative follows Justine Greening’s calls last week to move “beyond aid” if we are to end extreme poverty by 2030.

In a keynote speech on the UK’s development priorities, the Development Secretary argued that while aid is crucial, it will not be enough to eradicate poverty by itself.

She called on richer countries to join Britain’s commitment to spend 0.7% of its national income on aid – but also to go further, going beyond aid to bring in new players (from the private sector to philanthropists), find new money (from taxes to remittances) and to focus on new needs (from economic growth to good governance).