Memo to the G20: stop turning a blind eye to tax dodgers

While media attention at Friday's G20 meeting in Washington focused on the Eurozone crisis, finance and development ministers were quietly backing away from their commitments to help poor countries collect more of the billions they lose to tax dodgers.

True, the development communique they issued on Friday evening did attend to some other important challenges, notably food security, but on tax it was shockingly thin.

More successful tax collection has a huge part to play in poor countries' development, not least because it would enable people living in poverty to benefit from better provision of public services such as schools and hospitals.

But rather than committing resources to help developing countries collect more tax, promising new pro-transparency laws, or putting pressure on tax havens to stop selling financial secrecy, the G20 merely welcomed existing work on "domestic resource mobilisation". That is policy-speak for "poor countries generating more money for themselves".

Some G20 countries went even further in the wrong direction, systematically watering down an expert report advising member governments on how poor countries can boost their tax revenues.

If the G20 were serious about harnessing the power of tax against poverty, they would have made a specific commitment to the big solution to tax dodging – financial transparency. Such transparency would make life far harder for companies and individuals hiding wealth in tax havens, not to mention the multinationals that use financial secrecy to dodge billions in tax in poor countries.

In Friday's communique, however, it gets just one throw-away mention, in a sub-clause about the desirability of transparency in the corruption-prone construction industry. For the many organisations and individuals worldwide working for tax and transparency, the G20 meeting was therefore a big disappointment.

In 2010, by contrast, G20 countries pledged both to help developing nations improve their tax collection systems and to improve global financial transparency.

It is early days for working out what went wrong last week. However, we know that tax havens and multinational companies have significant sway over G20 governments. There is plenty to lose from moves to end the secrecy tax havens offer, as is evident from Switzerland's attempts to maintain its globally corrosive banking secrecy in the face of demands from American and other rich-country tax authorities.

Why do G20 pronouncements matter? Because G20 countries are the most powerful in the world – they have the political and economic weight to make things happen. Without their support - for instance for the accounting reforms that would make it harder for multinational companies to artificially shift profits into tax havens - change will come far more slowly, if at all.

Another document unofficially doing the rounds in Washington made a far more powerful case for taxation. That document was an early outline of a report Bill Gates is preparing for the G20 heads of states' meeting in Cannes in November.

It's terrific that Gates gets the urgent need for reforms to help poor countries collect the billions they are already owed. (Let's be clear: this is not about imposing new obligations on anyone, it's simply about getting multinationals and weathy individuals to stop cheating poor countries.)

However, it is vital that G20 countries throw their weight behind concrete reforms on tax and transparency. It is all too easy for them to pick and choose convenient options from a report written by someone else, however brilliant.

Between now and the Cannes summit meeting, those of us working for tax justice need as much help as we can get to convince G20 leaders to address the issue adequately.