G8 wraps with progress on tax evasion - but not on Syria

The sun came out at Lough Erne Resort in Northern Ireland today, the last day of the G8 summit, as leaders of the group announced they have agreed on new measures to clamp down on money laundering, illegal tax evasion, and – one of the political hot buttons of the day – corporate tax avoidance.

But despite the sunshine and smiles, the summit was unable to make progress on the issue that has weighed heavily on Western leaders in recent days: what to do about the ongoing civil war in Syria.

In a joint statement issued as the two-day meeting hosted by British Prime Minister David Cameron wraps up, the leaders pledged to ensure national governments maximize tax receipts and fight "the scourge of tax avoidance."

At this afternoon's press conference, Mr. Cameron said tax avoiders should have "nowhere to hide."

The plan calls for automatic information sharing to help clamp down on non-payment of taxes and proposals to change rules that let companies shift profits across borders to avoid taxes.

This last commitment comes in the wake of complaints in the US Senate and British parliament that technology and Internet giants such as Amazon, Apple, and Google were shifting US and UK revenues to countries including the Netherlands and Ireland in order to take advantage of lower rates.

The leaders also committed to rolling back protectionism.

Will it help?

Swiss bank UBS economist George Magnus, widely credited with predicting the 2008 global economic crisis, says world leaders are largely sincere in seeking agreement – albeit driven by political pressure at home.

"People are clearly demanding fairness. It's something that has come back into economic parlance in the last few years," he says.

However, Mr. Magnus cautions, governments tend to "speak with forked tongues" on the issue. "Political leaders are quite keen to stigmatize corporations, but as far as corporate tax goes, governments make the tax rates and are engaged in competition to attract companies."

Jim Clarken, executive director of the UK-based international development charity Oxfam, says the commitments do not go far enough.

"This year has been a warning to tax dodgers that their days of ripping off rich and poor countries alike are numbered. But tax dodging is a dark stain that needs more than a quick wash," he says.

Others take an even dimmer view. Eamonn McCann, a veteran of the Northern Ireland civil rights campaign of the 1960s and now a newspaper columnist and activist for the Socialist Workers' Party, says the tough talk on tax is a fraud.

"Do I take their claims seriously? I don't [even] think they take their claims seriously," he says. "David Cameron is supposed to be the leader of this let's-do-something-about-tax-dodging movement and says let's have an international agreement on tax, [but] if he was serious Britain would do it [alone]."

Mr. McCann was among the 1,500-strong protesters who marched to the security perimeter around the summit on Monday night. Local issues, particularly fracking, dominated those raised by protesters, with the international contingent mostly consisting of environmentalists from Britain and NGO activists.

No progress on Syria

But despite the commitment to crack down on tax evaders, progress on the other major issue at the summit, Syria, proved elusive.

Disagreements over Syria dominated the meeting. Western nations – most recently the US – have begun to publicly consider arming the rebels in response to purported use of sarin chemical weapons by forces loyal to Syrian President Bashar al-Assad. But Moscow remains opposed to foreign intervention in the conflict, especially the supplying of arms to the rebels.

Speaking at the post-summit press conference, Russian President Vladimir Putin said the West should think "very carefully" before arming the opposition.

Russian Deputy Foreign Minister Sergei Ryabkov, said: “This would be not just unacceptable for the Russian side, but we are convinced that it would be utterly wrong, harmful and would completely upset the political balance.”

A statement on Syria is likely to be issued, but under the rubric of the G7, excluding Russia.

Ben Tonra, professor of foreign, security, and defense policy at University College Dublin says the United States and Britain lack a coherent approach to the Syrian conflict and suggestions of arming rebels risk emboldening anti-Western insurgents. 

"I've warmed to the Russian position. In simple geostrategic terms, the Russians don't give a damn who is in charge in Damascus so long as they get a guarantee on their interests. The West is flailing around," he says. "I don't think the Western position has any credibility. There's no end-user certificate with an M-16."