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Tax havens cost UK $5.6b a year, claims union group

LONDON (Bloomberg) — Tax evasion through countries including Switzerland and Jersey costs the UK Treasury at least £4 billion ($5.6 billion) a year in revenue, a union group estimated.

Tax withheld by 15 countries shows that the amount not being paid to the Treasury would fund programmes to eliminate child poverty and to help jobless workers cope with the recession, the Trades Union Congress said.

The estimate adds to pressure on Prime Minister Gordon Brown to act as leaders of the Group of 20 nations meeting in London next month prepare to debate ways to tighten the tax net.

"With the tax take falling because of the recession, there can be no better time to get tough with the super rich, so many of whom did so much to throw the world into recession," Brendan Barber, general secretary of the TUC, said in an e-mailed statement yesterday.

His comments also step up the outcry against the banking industry after the UK government pledged hundreds of billions of pounds of support for institutions including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

Lawmakers and union groups have urged Brown to rein in the offshore asset management businesses of the banks partly owned by the government. Brown, who hosts a G-20 summit on April 2, is attempting a crackdown on tax havens in the UK, and a Treasury review into Britain's relationship with Jersey, the Isle of Man and Guernsey is due around the time of the government budget on April 22.

Concern about tax havens is rising on the UK political agenda after Chancellor of the Exchequer Alistair Darling loaned the government of Iceland $1.3 billion to repay British depositors who lost money when banks in Reykjavik collapsed. Iceland isn't a tax haven.

Richard Murphy, a tax consultant employed by the TUC, generated his estimates using tax data supplied to the government's Revenue & Customs department and made public to Parliament.

Banks in countries the TUC names as tax havens, which also include Belgium, Austria and Luxembourg because they don't share data with the UK, withhold 15 percent of the interest they pay to customers and remit a portion of that to the UK government.

"People who ask for tax to be withheld have no intention of declaring the income received to the UK," the TUC said in a statement. "If they had intention of doing that, they would be better off opting for information exchange."

The TUC represents 6.5 million workers in 59 unions across the UK Brown's ruling Labour Party gets about two-thirds of its annual funding from unions.

The TUC's tax haven list also includes the British Virgin Islands, Gibraltar, Guernsey, Jersey, Netherlands Antilles, Turks & Caicos Islands, Andorra, Monaco and San Marino.