How many international tax scandals will it take?

Wednesday, May 2, 2018 - 07:39

How many international tax scandals will it take, before rich countries are ready to come to the table and negotiate global solutions global tax problems?

An intensive four days of meetings and discussions about how best to further and finance development (FfD) have come to an end. During the four days both Ministers and other high-level delegates spoke. Civil society representatives also took active part in both during plenary sessions and in side-events.

ActionAid was there as part of Civil Society Financing for Development (FfD) group – and we made our voices and demands heard. Our particular area of interest was that of tax and illicit financial flows (IFFs), and we were thus part of organizing special side event on how to tackle IFFs.

Global tax scandals such as the Paradise Papers, have exposed how many wealthy individuals and multinational companies are involved in IFFs, and how a number of countries, including some major economies, are systemically providing institutionalized facilitation of IFFs. The leaks illustrate how our global tax system is deeply flawed and full of loopholes. We know that IFFs are costing developing countries billions of dollars every year. At this year’s FfD Forum, the developing countries yet again called for an intergovernmental UN negotiation to solve these issues, but the rich countries are still dragging their feet on this point. This leaves us wondering how many international tax scandals it will take, before the rich countries are ready to come to the table and negotiate global solutions to this global problem.

Therefore, the two main messages we – the CSOs – brought to the table were:

  • A call for greater cooperation and coordination on international corporate taxation with legally binding rules agreed through a democratic and inclusive process - an inclusive UN inter-governmental tax commission with the mandate and resources and an international tax convention that together ensure effective international tax cooperation and transparency, and tackle harmful tax policies and practices, tax havens and secrecy jurisdictions, and other elements facilitating illicit financial flows.
  • Pressuring all governments to move towards progressive, effective and gender-just tax systems which contribute to equitable redistribution and ensure appropriate public funding for gender responsive public services.

As a means to discuss this in more detail we co-organized a side-event specifically on the detrimental effects of IFFs on development. The event was titled “Tackling Illicit Financial Flows: Time to drop false solutions and embrace real change”.