Paris: In a major gain for India, the G-20 Finance Ministers on Saturday decided to back measures to obtain tax information from entities, a move that can help countries get information about money stashed in tax havens.

A communique, issued at the end of two-day meeting of G-20 Finance Ministers including Pranab Mukherjee, said the meeting has underlined, in particular, the importance of a
comprehensive tax information exchange and encouraging competent authorities to continue their work in the global forum to assess and better define the means to improve it.

For the first time, there is acceptance that G-20 will put its weight behind the issues relating to obtaining tax information, a senior Indian official accompanying Mukherjee said.

"This is a big victory for India because India was responsible for getting this sentence included... We were the ones to get this incorporated in the G-20 communique for the
first time," R Gopalan, Secretary, Department of Economic Affairs, said.

Mukherjee, during his bilateral meetings with his counterparts from the US, UK, Australia and France, had put in strenuous efforts to get G-20 on board with India's concerns
on black money.

Gopalan said that global concerns on tax evasion are expected to be reflected from the Cannes Leader Summit scheduled next month. "...This is one of the most important takeaways which India expects from the Summit," he said.

"We will take the work forward in the Global Forum and get all the items defined. Then (countries) will start sharing information. This is a big victory for India...," Gopalan

Gopalan said at Cannes summit, India will press for a provision that enables countries to recover overseas assets of tax evaders. "We are working towards that... to get that done.
We hope to achieve it at the summit."

Earlier in his intervention at one of the sessions, Mukherjee sought a global consensus to check tax evasion and illicit cross-border flows by exchange of information among countries, including bank data relating to past transactions.

Announcing a contribution of 3,20,000 euros for a global forum to monitor effectiveness of tax avoidance and exchange information treaties, he said, "Tax evasion and illicit flows have posed serious challenges to the world economy and the efforts of the countries to raise revenue for development."

He said, in last two years more than 700 Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreements (TIEAs) have been signed.

For these instruments to be effective, it is essential to reach a global consensus on sharing of past information, relating to tax evasion, he said.

The government in India is under pressure from political parties, civil society and courts to take tough action against tax evasion and black money.

India has signed or revised DTAAs and TIEAs with 56 countries, including Switzerland and sovereign jurisdictions. But, it finds difficulty in accessing information relating to past transactions.

Mukherjee said Automatic Exchange of Information among countries is one of the most effective ways to improve voluntary tax compliance and decrease evasion.

On the issue of IMF helping the Euro Zone crisis, India took a stand that "Europeans will have to sort out their solvency requirements." The US also said that Europe has enough resources to solve its own problems. "IMF has very substantial uncommitted resources," US Treasury Secretary Timothy Geithner said.

At the G20 meet, Mukherjee also expressed concern over soaring oil and commodity prices resulting in high inflation and asked the member countries to evolve a mechanism for
stabilising the volatile price movements.

"The best way to cool soaring prices is to boost output with better technology, more competition among more producers and better information," he said at a session on commodities and energy.

With regard to fossil fuel subsidies, he said while India was strongly committed to the phasing these out, "we believe there is no one-size-fits-all model to implement fossil fuel subsidy reform," he said.

"...we need to ensure sustainable energy security for the poor. Even as we remain committed to reduce inefficient fossil fuel subsidies, the use of fuels such as LPG and Kerosene for domestic uses cannot be easily phased out in the near future," he said.

India opposes imposition of carbon tax

India strongly opposed imposition of carbon tax as an additional source of funding to
fight climate change.

"India believes that some of the measures like carbon export optimisation tax and levy on CDM/offsets violate the principles of the Convention (UNFCCC) as their incidence falls
entirely on developing countries and these cannot be recognised as a source of new and additional finance for climate change," Finance Minister Pranab Mukherjee said.

He was making an intervention at the G20 Finance Ministers' and Central Bank Governors' meeting on Development, Climate and Innovative Financing.

He said global levies on carbon emissions from shipping and aviation should be raised only if a mechanism for refund of revenues collected from developing countries in put in place.

The refund should not be treated as climate change finance flow or a contribution of developing countries to global revenue mobilisation envisaged under the UNFCCC, he

"We also feel that the flow of finance leveraged by international finance institutions (IFIs) or the multilateral development banks (MDBs) should be counted towards the overall target only if there is a net additional infusion of capital by the developed countries to the capital base of the MDBs/IFIs," he said.

Mukherjee said the grant or concessional portion of the loans advanced by MDBs on the basis of such new capital only should be counted as new and additional finance for climate

Mukherjee said that carbon offsets cannot be counted as a source of revenue if they lead to double counting of emissions.

Carbon prices were dependent on ambitious emission reduction obligations of developed country parties under a legal obligation, he said, adding that in a voluntary market the carbon emission reductions command a very low price.

"Hence the high revenue scenarios are not achievable unless Kyoto negotiations on the second commitment period or climate change negotiations under the Convention succeed," he said.

Mukherjee said the revenue raised through taxes levied on the basis of carbon content in fuels would mostly flow into the domestic budgets of the developed countries with hardly 10
per cent reaching the developing nations for climate finance.

"The cost of raising revenues like administering these taxes uniformly at a global level, cost incurred in transferring the funds to the developing nations have not been explicitly touched upon," he said, adding that these costs would significantly affect the feasibility of a global USD 25 per ton carbon levy.

He pointed out that the G77 and China have proposed that developed countries should contribute around 0.5 per cent of their GDP to climate finance.

"Therefore, a USD 25 carbon tax amounting to 0.05 per cent GDP of an average developed country alone would not suffice, especially when only around 10 per cent of this
amount will be available to the developing world," Mukherjee said.