Brown Plans Global Scrutiny of Tax Havens

Tax havens will be forced to submit themselves to international scrutiny under plans to tackle their culture of secrecy being proposed by Gordon Brown.

Despite a rearguard action by tax havens, the prime minister intends next week's G20 summit to discuss plans for a multilateral exchange of information on "offshore" accounts.

Brown will also propose using the International Monetary Fund and World Bank to boost the world economy as he seeks to focus on greater international cooperation, rather than divisions between the US and European governments over whether the financial system needs more fiscal stimulus or more regulation.

G20 finance ministers discussed a crackdown on tax havens at their talks last weekend and Brown has told Britain's international partners that he wants to build on proposals from the Organization for Economic Cooperation and Development (OECD) to "make sure tax secrecy is a thing of the past".

Brown would like the Paris-based OECD to work out a detailed blueprint for reform over the coming months if, as expected, the London talks on 2 April back action to combat capital flight and improve transparency.

Campaigners said the initiative was welcome but said much would depend on what tax havens would be forced to reveal. Under the current OECD plans, exchange of information is not automatic but relies on those making inquiries knowing full details of accounts and account holders.

Government sources said the UK was taking reform of tax havens step by step, fearful that pressing too hard at this stage would damage the growing international consensus for reform. They said Downing Street had been "besieged" in recent days as tax havens reacted strongly to signs that they will be the prime targets of proposals to toughen up international regulation. Some tax havens - including Jersey, Switzerland and Liechtenstein - recently announced plans for bilateral exchange of information with specific countries, but Brown believes that this does not go far enough and would handicap developing countries.

Britain says that a multilateral exchange of information system would be simpler to administer, more transparent and would provide minimum standards for all.

Campaigners welcome the government's stand. Claire Melamed at Action Aid said: "A multilateral system which ensured information exchange with tax havens would be a huge step forward and - if properly enforced - would allow developing countries to claim back some of the tax that is rightfully theirs."

Richard Murphy of the Tax Justice Network, said: "A multilateral system is the way forward but to be fully effective it would have to be automatic."

The TUC general secretary, Brendan Barber, said: "There are worrying signs that the G20 leaders will not rise to the occasion. While there does seem to be a consensus to do something about tax havens, reports suggest European leaders are resistant to a fiscal stimulus, while the USA is opposed to more global regulation. We need both."