Prime Minister David Cameron warned not to exclude poor countries from G8 plan for tax crackdown


David Cameron has been warned that his plan to crack down on tax avoidance at next week’s G8 summit will benefit the world’s richest nations but could “freeze out” the poorest countries.

In a letter handed to all G8 leaders, seen by The Independent, an alliance of 184 pressure groups claims the Prime Minister’s proposals could result in a “two-tier” system which allows advanced economies to share tax information on companies and individuals but excludes developing nations.

Although the US and EU want to include all countries eventually, some nations are arguing tax secrets should not be exchanged automatically with the developing world. The letter warns: “Excluding developing countries that wish to join such an international system – either directly or de facto through an unfeasible burden of immediate reciprocation of information – would in many cases freeze out those countries worst hit by tax avoidance.”

Soren Ambrose, a spokesperson for ActionAid International, one of the signatories to the letter, said: “We are at risk of a cosy deal between tax havens and rich countries which sees developing countries shut out. This would be a betrayal of ordinary people in poor countries which desperately need tax revenues to fund schools and hospitals rather than being siphoned into tax havens. The G8 must act now to make sure that poor countries are at the heart of, not outside of, any global crackdown on tax dodging.”

The groups fear this could result in new secrecy regimes in nations excluded from the “top tier”. They pleaded with G8 leaders to commit to a global tax information system open to all countries from the outset.

Ed Miliband has expressed similar fears. Writing in The Independent, the Labour leader said: “Tax information must be shared properly with developing countries which lack the data and resources needed to track money being funnelled out of their economies. Any new deal for sharing tax information at the G8 must include poor countries from the start.”

Mr Cameron and the Chancellor George Osborne want the new system open to all countries. A Treasury spokesman said: “The new global standard we are asking the G8 to agree to should be for developed and developing countries alike.”

Today Mr Cameron hopes to put Britain’s own house in order by persuading the 10 tax havens under its control to join the existing tax information-sharing regime in talks at Downing Street. They include the Cayman Islands, British Virgin Islands, Bermuda, the Isle of Man, Jersey and Guernsey.

In a speech today, the Prime Minister will admit that generous aid programmes have failed to tackle the root causes of poverty in poor countries – corruption, weak governance and institutions which lead to conflict and violence.

Mr Cameron will say: “For too long the international community has shied away from condemning the appalling corruption and mismanagement of resources and the fundamentally bad governance that is destroying lives in some developing countries.

“Corruption is wrong. It starves the poor. It poisons the system. It saps the faith of people in progress. It wrecks the case for aid... But by ending the era of tax secrecy and driving real openness over what governments and businesses do, it can change. But all this needs political leadership from the developed world.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Technical Author / Multimedia Writer

Negotiable: Recruitment Genius: This recognized leader in providing software s...

Recruitment Genius: Clinical Lead / RGN

£40000 - £42000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: IT Sales Consultant

£35000 - £40000 per annum: Recruitment Genius: This IT support company has a n...

Recruitment Genius: Works Engineer

Negotiable: Recruitment Genius: A works engineer is required in a progressive ...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent