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The Economic Times

Church to declare holy war on tax havens!

MUMBAI: India's Roman Catholic Church is planning to lend voice to the Pope’s campaign against tax havens. The Catholic Church will spearhead a nation-wide movement to persuade the government to review all Double Taxation Avoidance Agreements, especially treaties with tax havens like Mauritius, and prevail upon it to plug loopholes in laws that facilitate tax evasion in the country.

The Catholic Church in India is awaiting directions from Vatican, which is all set to release the encyclical, said to be the most authoritative directive a Pope can issue. Pope Benedict XVI, who is known among the Church hierarchy as the thinking Pope, gave shape to his second cyclical during his recent vacation in Northern Italy, according to reports appearing in Vatican media.

According to the London Times, the pontiff will denounce the use of “tax havens” and offshore bank accounts by wealthy individuals, since this reduces tax revenues for the benefit of society as a whole. Independent estimates put such evasion at nearly $12 trillion. Father Anthony Charanghat, director, Catholic Communications, Archdiocese of Bombay, said, “We will begin campaigning against tax evasion and tax havens of the world.”

We will use our resources to start a campaign through media and our various support groups, NGOs, and the print and electronic media to persuade the Indian government to take the right steps to check tax evasion,” said Father Charanghat.

The Roman Catholic Church in India is part of the worldwide Roman Catholic Church, under the leadership of the Pope and curia in Rome. All the bishops in India, both Western and Eastern, form the Catholic Bishops’ Conference of India, which was founded in 1944. There are over 17 million Catholics in India, who represent about 1.5% of the total population.

The proposed Vatican paper comes at a time the Indian tax regime is contemplating strict laws to check cross-border tax evasion. It is thinking of a law that will deny the benefit of DTAA to a transaction that is carried out essentially for the purpose of avoiding tax in India. The law could cover the practice of registering companies in low-rate tax havens too.

It also coincides with the ongoing campaign for the US presidential election, where tax evasion and tax havens have already become a major topic of debate. About $1.5 trillion worth of assets held in tax havens belong to US citizens, according to figures quoted by presidential candidate John Edward. Pope Benedict plans to push for a world trade and economic system “regulated in such a way as to avoid further injustice and discrimination”, according to media reports.

Vatican, the global headquarters of the Roman Catholic Church that boasts of a following in excess of a billion people, is pained at the injustice meted out to the poor by the tax havens of the world. It believes that money siphoned off by evading taxes could otherwise have been utilised for public welfare activities, including socially productive projects.

The Vatican’s campaign also comes against the backdrop of growing worldwide awareness about ethical taxation, an idea that revolves around persuading corporations to be morally responsible and pay taxes due to their respective governments, instead of exploring ways of avoiding taxes within the safety of a legal framework. The assumption is that it is because they have the support of the society that they are able to amass such huge wealth. Hence, there is a moral responsibility to pay back to society.
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