August 31, 2011

Christian Aid claims tax deal will harm poor countries

by Jan Harris

Christian Aid has called a tax deal between the UK and Switzerland ‘a disgrace’ because of its potential impact on developing countries.

The deal will see the Swiss government taxing the funds in UK taxpayers’ Swiss bank accounts and handing the tax over to the UK treasury.

While this could generate around £5 billion a year for Britain, the identity of tax-evaders will remain hidden unless the account holder agrees to come clean.

Christian Aid warns that this amounts to collusion with criminality and significantly reduces the chance of developing countries recouping the taxes owed to them by people with bank accounts in so-called ‘tax havens’.

Although UK holders of Swiss bank account holders who chose to keep their identity secret will have to pay back-tax on their funds, those who do decide to reveal their identity to UK authorities will be exempt from the back-tax.

Christian Aid estimates that tax-evasion costs poor countries around $160 billion a year, money which they could use to provide health, education and other services.

The charity wants the issue to be raised at the G20 November summit, with a view to ending tax secrecy in countries such as Switzerland.

On the other hand, the UK government believes the agreement is a landmark deal.

It gives UK authorities the right to ask Switzerland for the banking details of 500 UK citizens annually, if it is believed that further investigation is needed.

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