The Pope is to issue an encyclical in March, calling for the closure of all tax havens as part of the response to the world economic crisis. The Vatican considered releasing the encyclical last year, but decided to postpone the date of release in order to carry out thorough research on global economics and the current crisis.
In a policy paper last December, the Vatican blamed the financial crisis on offshore centres such as the Channel Islands.
The encyclical is expected to be published on March 18, with a formal release on May 1 to coincide with the International Workers’ Day.
In it, the Pope reportedly condemns “unhealthy and inequitable financial practices" and points out that the global deficit caused by offshore banking is $255 billion, nearly three times the amount given in aid to developing countries across the world.
The encyclical is also expected to claim that tax havens are the main route through which money is taken out of developing countries to the developed world, thus contributing to global poverty.
The Vatican is not alone in having concerns about the roles of tax havens. Christian Aid is asking supporters to email their local MPs to encourage them to lobby Prime Minister Gordon Brown on the secrecy surrounding offshore banking.
The development agency accuses multinationals of “aggressive” tax avoidance and of using “creative accounting” to reduce their tax liabilities by hiding their true profits in off-shore accounts.
It says that the amount of wealth being lost “by the back door” means developing nations have to rely on aid instead of being able to provide basic services like education and healthcare by themselves.
The aid agency is calling for new rules that would force multinational companies to reveal their profits and the amount of tax they are paying in each country where they operate.
It also wants to see Prime Minister Gordon Brown press other world leaders for country by country reporting at the forthcoming G20.
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(Source: CT)