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Tax justice has come a long way - but dramatic global reform still needed

10 July 2014 - Following widespread reporting of aggressive tax avoidance this week, Christian Aid is keen to highlight the wider picture: that while the world has changed for tax dodging companies and individuals, dramatic further reforms are needed.

Christian Aid launched its tax campaign in 2008 with the publication of Death and Taxes, which estimated that tax dodging by multinational companies alone costs developing countries US$160 billion a year, draining funds from crucial services such as health and education.

That figure has at times been disputed, but there is a consistent view that losses from such tax dodging exceeds the combined aid spending of rich countries, which the OECD  said in 2012 stood at US$125.6 billion.

Since the launch of our report, a great deal has changed, thanks to the many individuals and organisations working for tax justice around the world.

In many countries, awareness of the serious harm done by tax avoidance and evasion has soared. As a result, governments and campaigners have challenged some of the ways in which some firms and individuals fail to contribute their fair share of taxes.

This in turn has led to ongoing reform work by the G8 and G20 groups of countries, as well as by the OECD, the United Nations and by regional groupings such as the African Tax Administration Forum.

Highlights have included the recognition, by the G8 and G20, that automatic information exchange between countries is the best way to catch up with tax evaders who have sought to hide their income and wealth by putting it ‘offshore’.

Christian Aid and others have also hailed governments’ acceptance that international rules for taxing multinationals are badly outdated and that, among other reforms, multinationals should be required to report their finances separately for each country in which they operate. This will help to expose firms which are artificially shifting their profits out of the countries in which they were actually earned – and into tax havens.

Another sign of progress has been rich countries’ recognition that developing countries are worst affected by tax dodging, because they are least able to counter the strategies used by multinationals and wealthy individuals.

In the UK, Christian Aid and others have welcomed the Government’s decision to create a new, public register of everyone who owns companies registered in the UK. This will help to counter the crimes made easier by secret ownership of companies, including tax evasion.

We are heartened by progress such as this and also conscious that a massive amount of change is still needed to break down the financial secrecy which sustains tax evasion and other crimes across the world.

We are aware, too, that there are hugely powerful interests defending the status quo against those who campaign for tax justice and seeking to frustrate reform at every turn.

Some of the changes still urgently needed are: 

  • Developing countries be involved on an equal footing in international talks about the reforms that will help all countries catch up with tax dodging companies and individuals.

  • A requirement that multinational companies report their accounts on a country by country basis and that this information is made public. 

  • G20 governments set an example for the world by creating public registers of the real owners of companies on their territories. UK tax havens – the Overseas Territories and Crown Dependencies – to do the same. 

  • Rich countries – especially major tax havens such as Switzerland and the British Virgin Islands – agree to share automatically information about the financial holdings of individuals with developing countries.

Our tax campaign has not targeted particular individuals, but the implementation of the measures we advocate will affect all – corporates as well as individuals - who seek to hide their activities offshore.

To find out more about our tax campaign, visit www.christianaid.org.uk/phantomfirms

For more information, please contact Rachel Baird on 0207 523 2446 or rbaird@christian-aid.org. 24 hour press duty phone - 07850 242950.

 


 

Notes to editors:

1. Christian Aid works in some of the world's poorest communities in around 50 countries at any one time. We act where there is great need, regardless of religion, helping people to live a full life, free from poverty. We provide urgent, practical and effective assistance in tackling the root causes of poverty as well as its effects.

2. Christian Aid’s core belief is that the world can and must be changed so that poverty is ended: this is what we stand for. Everything we do is about ending poverty and injustice: swiftly, effectively, sustainably. Our strategy document Partnership for Change www.christianaid.org.uk/images/partnership-for-change-summary.pdf explains how we set about this task.

3. Christian Aid is a member of the ACT Alliance, a global coalition of more than 130 churches and church-related organisations that work together in humanitarian assistance, advocacy and development. Further details at http://actalliance.org

4. Follow Christian Aid's newswire on Twitter: http://twitter.com/caid_newswire

5. For more information about the work of Christian Aid, visit http://www.christianaid.org.uk