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Christian Aid ‘intrigued’ by PM’s call for mechanism to track multinationals’ taxes

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David Cameron has called for a “new mechanism” to track where multinationals make their profits and where they pay their taxes, as the UK government comes under increasing pressure to tackle tax havens. Christian Aid, which today renewed its demand for mandatory country by country reporting “so that tax abuse can be quickly identified”, told Tax Journal it was intrigued by Cameron’s remarks given that the UK government has rejected calls for such a reform in the past.

The charity released a new report Who Pays the Price? Hunger: The Hidden Cost of Tax Injustice and said: “The scandal of world hunger could soon be ended if the revenues that developing countries lose through tax dodging were available to them to invest in agricultural development.”

Last week the CBI and Ernst & Young set out their objections to mandatory  country by country reporting, while suggesting that companies could no longer ignore calls for greater transparency.

The prime minister said last month that EU leaders should consider how country by country reporting of tax paid could be “further encouraged on a voluntary basis”.

Speaking at a White House press conference with US president Barack Obama yesterday, Cameron said: “I am an unashamedly pro-business politician. But as we open up our economies to get business growing, we need to make sure that all companies pay their taxes properly and enable citizens to hold their governments and businesses to account.

“Today we have agreed to tackle the scourge of tax evasion. We need to know who really owns a company, who profits from it, where the taxes are paid. We need a new mechanism to track where multinationals make their money, and where they pay their taxes, so we can stop those that are manipulating the system unfairly.”

Christian Aid’s senior economic justice adviser Joseph Stead told Tax Journal that the charity was intrigued by Cameron’s comments. “We look forward to seeing further details,” he said.

“The political rhetoric on tax at the moment is welcome, but what will really matter to those in poverty suffering the consequences of tax dodging is turning that rhetoric into action.”

The charity said the UN’s Food and Agriculture Organisation had estimated the cost of creating a “world free from hunger” by 2025 at US$50.2bn per annum, on top of existing funding.

“That amount, and more, would be raised every year if governments ended tax haven secrecy and curtailed profit-shifting and tax dodging by multinationals in poor countries,” it added.

The report’s author, Alex Prats, said: “Malnutrition and related causes lead to the death of 2.3m children every year. In the developing world, it is the underlying cause of the deaths of 35% of all children under the age of five.

“At the Millennium Summit in 2000, and later in 2009 at the World Summit on Food Security, political leaders agreed to halve hunger by the year 2015. But despite the promises made, progress has been disappointing. In Africa, the number of hungry people has actually increased by 36% over the period 1990-2012, from 175m to 239m people.

“If developing countries were able to increase their tax revenues and make effective use of the financial resources available, poverty and hunger could be eradicated. One of the main reasons they can’t is because of tax dodging.”

Christian Aid has called for the “true ownership” of companies and trusts to be put in the public domain. It is one of more than 100 organisations signed up to the “Enough Food For Everyone IF” campaign, calling for a new international convention on tax transparency.