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Use budget to scrap the shoddy Swiss tax deal, Christian Aid urges

March 19 2012 - The Chancellor George Osborne should use his Budget to abandon plans for a deal which is soft on UK tax dodgers with money hidden in Switzerland and hard on the poorest people in the world, Christian Aid says today.

The deal, which MPs criticised this month for treating UK tax dodgers more leniently than law abiding citizens, will allow people with secret Swiss accounts to remain anonymous, even as they start paying tax on their hidden money.

As a result, Switzerland’s financial secrecy will remain intact, so perpetuating the tax haven’s implicit support for tax dodging, corruption and money laundering by criminals across the world.

‘At a time of huge concern about how tax dodging by companies and wealthy individuals are harming the UK, the Chancellor should do the right thing and scrap plans for this shoddy deal with Switzerland,’ said Joseph Stead, Christian Aid’s Senior Adviser on Economic Justice.

‘There is no logic whatsoever in publicly claiming you’re getting tough on tax evaders while behind the scenes doing a deal with the world’s most dangerous tax haven – a deal which will allow UK citizens with secret Swiss accounts to go unpunished.

‘The deal requires the UK to collude with Swiss financial secrecy, which is doing massive damage across the world by helping criminals engaged in corruption, tax dodging and money laundering to get away with their crimes.

‘Christian Aid urges the Chancellor to use his Budget this week to do the right thing and abandon the Swiss deal once and for all.’

Christian Aid estimates that the UK’s Swiss deal will cost poor countries a minimum of £4 billion in lost tax revenues over ten years – and potentially far more.

‘The £4 billion is money which poor countries would have if efforts to crack Swiss financial secrecy were successful,’ added Mr Stead.

‘We fear the true cost to developing countries could be much worse, because other tax havens may copy the appalling example of the UK-Swiss deal and so entrench financial secrecy across a much larger part of the world.’

Mr Stead added: ‘We find it odd that the Treasury has not published its analysis of the impact of the Swiss deal on developing countries. The IMF, World Bank, UN and OECD all agree that such spillover analysis should be done and published. 

‘We also find it odd that they are willing to conclude a deal that preserves tax dodgers’  anonymity. In a speech this month, Treasury minister David Gauke described transparency as “not a ‘nice to have’ or something you choose to do when suits”. We agree with him.’

Christian Aid has previously calculated that tax dodging alone costs poor countries $160 billion a year - far more than they receive in aid.

The agency’s estimate that the UK-Swiss deal will cost poor countries at least £4 billion over 10 years is an estimate of the cost to developing countries of not having automatic information exchange with Switzerland.

The deal, if implemented, is highly likely to stop or severely slow progress towards such exchange – a system which would help both rich and poor countries to identify the individuals and companies with ‘offshore’ income and wealth and tax them accordingly.

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For more information please contact Rachel Baird on 0207 523 2446 or rbaird@christian-aid.org

Notes to Editors:

1. Christian Aid's calculation of the cost of the Swiss deal to poor countries uses estimates of the ratio between the tax revenue the UK could yield from the Swiss Deal, the revenue it could gain by breaking Swiss Financial Secrecy and UK-held Swiss assets. It then applies this to developing country assets held in Switzerland (data from the Bank of International Settlements).

2. Christian Aid works in some of the world's poorest communities in nearly 50 countries. We act where the need is greatest, regardless of religion, helping people build the lives they deserve.

3. Christian Aid has a vision, an end to global poverty and we believe that vision can become a reality. Our report, Poverty Over, explains what we believe needs to be done – and can be done – to end poverty.  Details athttp://www.christianaid.org.uk/Images/poverty-over-report.pdf

4. Christian Aid is a member of the ACT Alliance, a global coalition of 100 churches and church-related organisations that work together in humanitarian assistance and development.  Further details at http://www.actalliance.org

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

6. For more information about the work of Christian Aid visit www.christianaid.org.uk