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G20 summit must kickstart much bolder tax reforms

G20 leaders including Gordon Brown deserve credit for putting tax havens firmly on the international agenda and boosting resources for developing countries, says Christian Aid.

We welcome G20 leaders’ statement that action against tax evasion must benefit all countries and not just the rich.

Tax dodging costs developing countries at least $160 billion a year – far more than they receive in aid – and so tackling the crisis has the potential to unlock massive benefits for the poor.

Christian Aid also cautiously welcomes the G20’s decision dramatically to increase IMF funds available to developing countries.

However, it warns that the conditions attached to such funds in the past have contributed to the current crisis – and asks what, if anything, has changed.

‘We are also concerned about the G20’s apparent failure to target the new resources specifically at the world’s poorest countries, whose needs are most urgent,‘ says Christian Aid Head of Policy Charles Abugre.

‘We welcome the seriousness with which the G20 has looked at the tax issue,’ he adds. ‘But we are very disappointed by its choice of a system in which countries will exchange tax information on request only.

‘This puts the burden on poor countries to prove they need the information and removes the pressure on responding countries to rapidly reply. To work, countries need the capacity to apply sanctions if their request for information is denied – capacity that poor countries do not have.

‘Rich and poor countries alike urgently need a truly multilateral agreement for the automatic sharing of tax information, with sanctions against those who do not comply.

‘We sincerely hope the Summit is just the very beginning of a process of major reform, which world leaders will now pursue with courage and energy. We will be watching carefully to see what they do next about the theft of US$160 billion in tax revenue every year from developing economies.

Christian Aid says that in addition, multinational companies must be required to reveal their profits and tax payments in every country where they operate. That way, tax authorities can target their resources where abuses are most likely.

Mr Abugre adds: ‘The G20 must also keep working to prevent a resurgence of trade protectionism. Any new negotiations should truly prioritise the interests of the poorest countries. They need to be able to protect their small farmers and producers and to gain duty-free access to rich country markets.

‘Christian Aid welcomes the G20 commitment to deliver the Gleneagles aid promises to poor countries. Given the collapse in the value of the dollar, commitments will need to be increased to maintain their real value. Donors must also renew their pledge to eliminate economic policy conditions attached to aid and debt relief.

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For more information and to arrange interviews, contact Rachel Baird on 0207 523 2446 or 07545 501 749

Christian Aid works in some of the world's poorest communities in 49 countries. We act where the need is greatest, regardless of religion, helping people build the life they deserve.