British tax havens 'help cheat Third World out of billions

Christian Aid is demanding that the British government crack down on UK-owned offshore financial havens which are accused of helping tax dodgers cheat the developing world.

The charity estimates that tax evasion and offshore banking secrecy cost third-world governments up to $500 billion a year in lost revenues. Its demand for action coincides with last week's United Nations summit and with Tony Blair's declared wish to alleviate poverty in Africa.

Britain is singled out for criticism because many leading havens - including Jersey, Guernsey, the Cayman Islands and the British Virgin Islands - are UK territories or dependencies.

'The UK government has a unique responsibility,' said Andrew Pendleton, Christian Aid's policy adviser. 'Of the world's 72 tax havens, 35 are British territories or Commonwealth members. Tackling global evasion will take a lot of international co-operation, but it would be fitting for Britain to take the lead.'

In a report written by Pendleton and published last week, Christian Aid says that systematic tax dodging by rich individuals and multinational companies with offices in poorer countries is dragging these countries further into economic decline.

The charity claims that evasion is made easy by the havens, which offer low tax rates as well as minimal disclosure requirements. This allows tax dodgers to move money offshore illegally without fear of detection.

Corrupt politicians have used the same banking secrecy laws to divert public funds into private offshore bank accounts.

Christian Aid, which conducted its research in partnership with the pressure group Tax Justice Network, cites statistics showing that tax receipts in African and Latin American countries are proportionately much lower than in the developed world, and that they have continued to sink in recent years.

'Tax is the forgotten issue in the debate about how to tackle poverty,' Pendleton said. 'If these leaks could be plugged, poor countries would not be so reliant on handouts.'