New crackdown on tax evasion must involve poor countries, say NGOs

By agency reporter
November 23, 2013

The latest international clampdown on tax evasion must involve both rich and poor countries if it is to stop criminals hiding billions from the tax authorities, campaigners say.

Their new briefing, 'Automatic For The People', was released as representatives from over 100 countries gather in Indonesia this week (21-22 November) for the OECD Global Forum on Tax and Transparency.

Industrialised countries’ governments are setting up a new global system for automatically sharing information about foreign taxpayers. However, tax justice campaigners fear that little thought has been given to how it can work for developing countries.

Maria Villanueva, Oxfam policy advisor, said: "Without poor countries’ governments having a say on how a new tax system can work for them from the start, there’s a real danger the world’s poorest people will continue to be hit hardest by tax evasion.

"Tax evaders are already robbing poor countries of billions that could pay for vital public services, such as hospitals, schools and roads. Rich countries, whose banks are facilitating tax evasion, have a duty to help change the status quo, instead of continuing to profit from it."

Joseph Stead, Senior Economic Justice Adviser at Christian Aid, said: ‘If the new system is set up in ways which make it impossible for poor countries to participate, or benefit from it, then some of them may follow the logic of staying outside the system.

"And let us be honest – there is a logic. Countries whose governments do not share information about who owns what will – like other tax havens - attract dirty money from people and companies wanting to conceal it from the countries where they live and work.

"But if more countries become tax havens, that can only undermine the effectiveness of information-sharing between other governments. Far better to ensure now that the new information exchange system works for all countries, rich and poor."

Dr Dereje Alemayehu, Chair of the Coordination Committee of the Global Alliance for Tax Justice, said: ‘The new system should be flexible enough to accommodate countries with different levels of ability to systematically gather, share and use information about taxpayers.

"This would mirror other international deals – such as trade and climate treaties – which recognise that rich countries have greater capacities than poor ones.

"Rich countries should give developing countries the financial and technical support they need to ultimately achieve the same standards of information gathering, security and use as rich countries."

Martin Hojsik, Tax Justice campaign manager at ActionAid International, added: "It is critically important that tax authorities in poor countries have the information that they need to be able to collect the taxes owed to them. The G20 countries that are supporting this process have a responsibility to ensure that the benefits of this initiative are not missed by those that need them most."

* Read 'Automatic for the People' here (*.PDF Adobe Acrobat document): http://www.christianaid.org.uk/Images/Automatic_information_exchange_bri...

[Ekk/3]

Although the views expressed in this article do not necessarily represent the views of Ekklesia, the article may reflect Ekklesia's values. If you use Ekklesia's news briefings please consider making a donation to sponsor Ekklesia's work here.