Government plans to make life harder for ‘cowboy’ tax advisers selling aggressive tax avoidance schemes to UK tax payers are welcome but will make little difference in the battle to tax the trillions hidden offshore, Christian Aid said today (23 July)
"Aggressive tax avoidance and evasion usually involves taxpayers putting their wealth overseas and out of the reach of their own country’s tax authorities", said Joseph Stead, Christian Aid’s Senior Adviser on Economic Justice.
"That is how tax havens came to be holding an estimated £13 trillion, as estimated in a report this weekend by our partners the Tax Justice Network.
"Because tax dodging so often involves people and companies hiding money offshore, there are limits to what one country can do alone.
"To really succeed against tax dodgers, the UK should work with other governments to smash the tax haven secrecy which has allowed wealthy individuals and companies to cheat the rest of us and drain public services around the world of the funding they need.
"That means the UK using its international leadership to help create a new system of information sharing between governments, through which they tell each other who owns what within their borders. That would effectively end tax haven secrecy, and give today’s tax dodgers far fewer places to hide."
Mr Stead added: "The proposed UK crackdown on ‘cowboy’ tax advisers may simply push some of them abroad, into countries with weaker regulations and tax authorities. We need to combine action at home with action internationally - and developing countries are looking to countries like the UK to use their power to bring changes that work for all."
Christian Aid estimates that developing countries lose $160 billion a year as a result of tax dodging by unscrupulous multinational companies – more than they receive in aid.
To help solve the crisis, it is campaigning for two reforms to help end financial secrecy. One is the introduction of multilateral, automatic information exchange between governments, as described above.
The second is the introduction of new accounting rules requiring multinational companies to reveal information such as the profits they have made and the taxes they have paid separately for each country in which they operate. This would make it harder for firms artificially to shift profits out of the countries where they were made and into tax havens.
For more information about Christian Aid’s tax campaign, see www.christianaid.org.uk/tax