Christian Aid welcomes white paper commitment to tax reform

Christian Aid has welcomed moves announced by the Government which could herald major improvements in the way tax is regulated internationally.

A white paper unveiled by International Development Secretary Douglas Alexander included an undertaking that the UK "would discuss with its partners whether initiatives such as country-by-country reporting can offer an effective and suitable means of advancing the tax agenda".

Country-by-country reporting would require all companies and corporations trading internationally to disclose annually the profits made and taxes paid in every country where they operate.

Christian Aid says the measure is vital if widespread tax dodging by such concerns, in which they manipulate accounts to lower their tax liability in developing countries, is to be countered.

The international development agency estimates that the practice, known as trade mispricing, costs developing countries at least US$160bn a year in lost tax revenue. If used according to current spending patterns, the money could save the lives of 350,000 children under the age of five annually.

Christian Aid senior political adviser Melanie Ward said: "The true test of any successful reform of international taxation, however, will be whether the Government can lead the rest of the world towards a new global agreement that enables poor countries to recover much of their missing money from tax havens."

Ms Ward also praised the announcement that CDC plc, formerly the Commonwealth Development Corporation, owned by the Department for International Development (DFID), will now only invest in jurisdictions which comply with international tax standards.

In addition, all existing CDC investments in jurisdictions committed to, but not yet implementing a proposed new tax standard, are to be reviewed.

The move follows criticism last year that the company, set up to channel taxpayers’ money to projects in the developing world, had based many of its 78 subsidiaries in tax havens.

Christian Aid also welcomed additional funding for civil society organisations, including faith-based groups in the UK and overseas which have been hard hit by the financial crisis.