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NGOs criticise Switzerland over tax

A father and daughter beg on the streets of Rawalpindi, Pakistan

(Keystone)

Non-governmental organisations have called on Switzerland to play a more active role in regulating international financial markets and to review its stance on tax.

Their demands come as a United Nations conference on financing development takes place in Doha, Qatar. Among the topics being debated is how to stop capital flight and tax evasion in poorer countries.

Developing nations are demanding the stronger regulation of financial markets and the reigning in of what they call "damaging" tax practices.

Swiss NGOs say that Switzerland has a duty towards these countries. "The government has been putting its feet on the brakes so far," said Peter Niggli, head of the Swiss Alliance of Development Organisations, at a media conference in the Swiss capital, Bern, ahead of the Doha meeting.

According to specialists such as Niggli, the Swiss cabinet is against global market regulation because it wants to defend banking secrecy as well as some offshore elements of the banking industry.

They add that this does not make economic sense and contradicts the aims of official Swiss development policy.

Tax policy is also an important instrument in the financing of development aid, according Bruno Gurtner, president of the Tax Justice Network.

Unregulated competition for taxpayers' money and the existence of tax paradises cost developing nations around $250 billion (SFr303 billion) each year – more than twice what they receive as development aid, he added.

Lack of results

Tax evasion and capital flight were already the main issues discussed at UN development aid conference in Monterrey, Mexico, in 2002. But this did not result in any binding agreements.

Aid organisations are concerned that the follow-up conference in Doha, which ends on December 2, will not yield any concrete results either.

"Switzerland and other financial centres are pressing for meaningless statements to protect their status as tax havens," said Gurtner.

Switzerland turned down an assessment by the UN Tax Committee as part of the preparation for the Doha conference. The authorities have also refused to consider tax evasion funds as "dirty" money.

Foreign ministry reaction

The Swiss foreign ministry said that the NGOs' criticism was unjustified. It added that Switzerland would take part in the Doha talks, where the delegation is being led by Foreign Minister Micheline Calmy-Rey, in a constructive fashion.

It added that Switzerland, which it said was no tax haven, had helped negotiate acceptable compromises during pre-conference talks.

The Swiss government does not want to hinder the fight against tax evasion, it stated further. For the cabinet, the responsibility for attempts to evade taxation lies firmly with the countries missing out on revenue.

NGOs are nevertheless calling on the Swiss government to abandon its "resistance to global and far-reaching cooperation on tax issues".

They are demanding that Switzerland adopt international standards for exchanging information set out by the UN and the Paris-based Organisation for Economic Cooperation and Development.

They are also calling for tax agreements with developing nations and stronger support for these countries within international financial institutions.

swissinfo, based on an article in German by Charlotte Walser, InfoSud

Financial crisis to spread

The global financial crisis is also expected to affect developing nations.

Aid organisations fear that the expected recession will lead to a drop in investments and development aid.

Government development aid is expected to fall because it is based on a percentage of the Gross Domestic Product.

Aid specialists are also concerned that exports from developing nations will shrink while debt will continue to increase.

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