News, Politics

G20 must include poor countries to fix the broken tax system

G20 must include poor countries to fix the broken tax system
September 4th, 2013
Author: Economic Voice Staff

G20 leaders must ensure developing countries are fully included in measures to clamp down on global tax avoidance, ActionAid said today.

The leaders are planning to adopt an OECD report which is billed as a once in a generation opportunity to fix the broken international tax system at their meeting in St Petersburg.

The Base Erosion and Profit Shifting (BEPS) Report recommends a raft of internationally co-ordinated action across the G20 to prevent tax avoidance and improve transparency.

But ActionAid is calling on the G20 to ensure that developing nations are treated as full and equal partners in the deal.

The OECD has estimated that developing countries lose three times more to tax havens than they receive in aid each year.

Preventing these losses would generate more than enough extra money to put the 57 million children who currently don’t go to primary school, into the classroom.

ActionAid this year published data showing almost half of all money invested into developing countries goes through tax havens.

ActionAid Tax Justice Campaign Manager Chris Jordan said: “Flaws in the current tax rules allow companies to dodge billions in tax, depriving governments of vital cash for essential public services such as schools and hospitals in poor countries.

For the developing countries that lose billions of dollars each year to aggressive tax avoidance, the stakes couldn’t be higher. It’s vital that they have a seat at the table, so global tax rules aren’t stitched up by the major powers.

Earlier this year, ActionAid welcomed the main thrust of the OECD BEPS report which recommended a rapid reform of the current tax rules.

The OECD was right to recognise that people will no longer tolerate a business as usual approach to tax, which has created a handful of big winners at the expense of billions of ordinary people,” Jordan added.

The OECD report has laid down a challenge to the United Kingdom and governments around the world to fix the broken tax system. Are they prepared to co-operate fully with other nations including developing countries to establish an equitable set of rules, or will competitive self-interest continue to win the day?

ActionAid is campaigning for world leaders to take urgent action to end harmful tax breaks, stop corporate tax dodging, and make companies publish where they pay tax and how much tax they pay.

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