UK in danger of breaking promise to help poor countries collect tax billions

George Osbourne

The UK is in danger of breaking its promises to ensure that poor countries benefit from the international crackdown on tax evasion, Christian Aid says.

The warning comes as the Organisation for Economic Cooperation and Development (OECD) unveils new proposals for a system through which governments will exchange information about the financial accounts held by foreign citizens. The system will help catch tax evaders who have hidden money offshore.

But the OECD proposals say nothing about how to ensure the reform works for poor countries as well as rich ones.

Joseph Stead, Christian Aid’s Senior Economic Justice Adviser, said: "Up to $9 trillion dollars is thought to be hidden offshore from the tax authorities in developing countries. Those governments need information just as much as the UK - but they are being told they will have to wait.

"The Chancellor George Osborne promised last year that G8 countries would take action to help developing countries collect tax that is due to them. Today all we have seen is action to help OECD countries collect tax within the OECD. There’s still time for Osborne and his G20 counterparts to deliver on their promises but the clock is ticking."

When G8 leaders met in the UK last summer, their final declaration recognised that rich countries “have a duty to help” developing countries collect the taxes owed to them.

The OECD report released today contains proposals to make it much harder for people and companies to hide money in tax havens, by creating a new system through which countries will collect and share information on assets held in financial institutions by foreign citizens.

Automatic Information Exchange has been a goal for tax campaigners for many years and the latest OECD proposals are a big step towards its realisation.The proposals have already been approved by the OECD and are set to be endorsed by G20 Finance ministers at their meeting in Sydney this month (22nd and 23rd February).

Mr Stead added: "The UK, the OECD and the G20 have all said that they want automatic information exchange to be a global system - and we support them on this. But if it works only for the UK, OECD and G20 then it’s a system for the rich. That would be dangerously short-sighted.

"We want to see the UK, OECD and G20 commit to a process which enables developing countries to be part of the new system and to start benefiting from it before they are burdened with costs.

"There are two key things that would help with this. Firstly, there must be a way to ensure that tax havens have to share information with all countries, not just the rich ones which are powerful enough to force them to share. Creating a multilateral agreement is the best way to achieve this.

‘Secondly, rich countries should recognise the challenge poor countries face in participating in these processes. This means making special provisions to ensure poor countries can receive information from the outset, while they develop their ability to reciprocate. This will enable them to join faster and benefit sooner."

Source: Christian Aid