Rich countries accused of foiling effort to give poorer nations a voice on tax
- The Guardian
- Jul 15, 2015
- 3 min read
Aid agencies at Addis Ababa development finance summit claim UK and others have obstructed talks aimed at enabling poor countries to influence UN tax policy
Aid agencies on Monday accused the world’s richest countries, including the UK, of blocking plans to allow poor countries a greater say on UN tax policies.
The upgrade of the UN tax committee to an intergovernmental body was widely seen as a way for less wealthy nations that have struggled to build effective tax systems to influence policy decisions at the UN.
The UK joined the US and several other wealthy countries at the UN financing for development conference in Addis Ababa in a manoeuvre to limit discussions on tax policy at the UN, arguing that the Organisation for Economic Cooperation and Development (OECD) was taking the lead on tax issues.
But a proposal presented to the conference by the OECD, known as a thinktank for the world’s 34 richest nations, was also criticised for treating developing countries as an afterthought.
The OECD and the UN Development Programme launched a project entitled tax inspectors without borders to help poorer countries bolster domestic revenues by strengthening the ability of tax authorities to limit tax avoidance by multinationals.
The initiative, which involves providing tax audit experts to work alongside local officials dealing with the affairs of multinationals, has had encouraging results across pilot projects in Albania, Ghana and Senegal. Evidence from Colombia, meanwhile, indicated an improvement in tax revenue from $3.3m (£2.1m) in 2011 to $33.2m in 2014, “thanks to tax audit advice and guidance”.
Aid charities believe developing countries should build robust tax systems to prevent them from borrowing heavily and getting into debt, as highlighted in a recent report by the Jubilee debt campaign.
The World Bank has come under heavy fire in the past for encouraging poor countries to cut corporate taxes to boost foreign direct investment. Ethiopia, Mongolia, El Salvador and Puerto Rico are among 38 countries in the report that are slipping dangerously into debt after borrowing on the international money markets to bridge the gap left by large tax shortfalls.
The Addis Ababa conference was expected to produce a series of high-level deals to promote sustainable, self-sufficient development. But the charities fear the UN and the World Bank will promote private finance initiatives that involved either privatisation or greater borrowing to finance investment, improve infrastructure and public services.
Speaking at the conference, a spokeswoman for ActionAid said: “The UK government has positioned itself as a global leader on many aspects of sustainable development, aid and in global efforts to tackle tax avoidance and evasion. It is therefore disappointing that the UK appears to be one of the few governments blocking progress on the important issue of a tax body.”
Failure to tackle this question in Addis will not make the urgent need for international tax reform go away. It will simply intensify the challenges ahead for the international community. There is growing recognition that the OECD alone cannot ensure global rules work for all countries, especially the poorest. Blocking agreement on an obvious solution in Addis simply delays the inevitable while putting other critical processes at risk.
Save the Children said the world was “sleepwalking towards failure” at the global finance summit, adding that the UN should create an international body to oversee global tax matters.
A spokesman said: “Tax has never been more under the spotlight as the source of finance for development, but decisions affecting the poorest countries and their ability to recoup money owed to them are taken in an elite club of the most powerful nations. This 20th-century way of doing business is no longer appropriate for the era of sustainable development goals.”
Source: Theguardian.com
By: Phillip Inman
