David Cameron has written to European Union leaders demanding measures to tackle “staggering” levels of tax evasion that are damaging the revenues of governments at time of economic recession.
In the letter, the Prime Minister calls on the EU to back global measures and G8 agreement to share banking information and new laws forcing businesses to force companies to reveal where their profits go.
“The loss of tax revenue resulting from tax evasion and aggressive avoidance is staggering. In a period of fiscal consolidation where hard-working citizens and businesses are being asked to bear extra burdens, we need coordinated, truly global action to address these issues,” he writes.
An EU summit on tax evasion next month will be followed by a G8 summit under British chairmanship in June, “a timely opportunity”, Mr Cameron argues for, “the political will required to raise international efforts to a new level and take radical, rather than incremental, action”.
In the letter to Herman Van Rompuy, the president of the European Council, the regular EU summits of Europe’s leaders, the British leader calls for a “new global system of multilateral automatic exchange of information” and “the use of offshore trusts” to tackle tax evasion.
Mr Cameron welcomes recent moves by Britain, France, Germany, Italy and Spain to exchange banking information based on agreements with the US as “a significant step”.
“I hope we can give the strongest possible message of support from Europe for the rapid adoption of multilateral automatic information exchange as a new global standard, and encourage other jurisdictions to publicly commit to joining a multilateral system at the earliest opportunity,” he wrote.
Britain is also urging measures to “break through the walls of corporate secrecy” as part of a new international system to close tax loopholes.
“Competitive national tax systems go hand in hand with individuals and corporates paying the taxes they owe,” Mr Cameron wrote.
“The majority of them do so, and make a valuable contribution to society and to the funding of our public services. But some are choosing to shift their profits artificially to ultra-low tax jurisdictions, distorting competition.”
Mr Cameron also promised that British offshore financial centres would be brought into line after claims by Austria that the Channel Islands Gibraltar, the Cayman Islands, Virgin Islands are a haven for money laundering.
“We are also in advanced discussions with our Overseas Territories to do the same, and continue to work closely with them and the Crown Dependencies on further concrete steps they can now take to demonstrate their steadfast political and practical commitment to tackling tax evasion,” he wrote.