Colombia announces negotiating targets
Ministers, economists and NGOs speaking at a research conference in Paris today are calling on EU member states to be honest with their people about how a UN tax convention would drastically improve their lives. Speakers at the two-day conference described UN negotiations currently underway to establish a tax convention as the EU’s best shot to avoid losing over €1 trillion in public money to tax havens over the next 10 years, and urged EU states to halt their attempts to sabotage the process.
Ahead of the conference, French Economist Thomas Piketty warned the minority of mostly EU governments opposing a UN tax convention that they are making a “historical mistake that urgently needs to be repaired”.
Countries voted by a landslide majority at the UN last year to begin the process of establishing a UN framework convention on tax, which has the potential to deliver the biggest shakeup in history to tax systems everywhere. The framework convention would require global tax rules to be decided at the UN instead of the OECD, where these have been decided by a small club of rich countries for over sixty years. Tax experts and campaigners argue that the UN’s transparency, inclusivity and human rights principles can bring about fairer and more effective tax rules, in contrast to the OECD’s unclear and undefined decision-making process, which takes place behind closed doors and which regularly concedes to the interests of the OECD’s tax haven members and to influence from corporate lobbyists. Early drafts and proposals for a UN tax convention have already included anti-tax abuse rules and transparency measures that have been blocked by the OECD for years.
EU countries have expressed concerns that a UN tax convention would duplicate the work of the OECD as the primary reason for their opposition to the process. The tax experts and NGOs organising today’s conference argue that a UN tax convention is diametrically opposed to the OECD process and for that reason would go far beyond the work of the OECD. The organisers are warning that EU countries are failing to communicate to their people how a UN tax convention would change global tax architecture for the better.
The two-day conference held at the Paris School of Economics – and organised by the European Network on Debt and Development (Eurodad), the EU Tax Observatory, the Global Alliance for Tax Justice, ICRICT (Independent Commission for the Reform of International Corporate Taxation), the Tax Justice Network and World Inequality Lab – brings together over 200 economists, researchers and campaigners from across Europe and the world to discuss the impact a UN tax convention would have on the EU and beyond.
Norwegian State Secretary Bjørg Sandkjær and Colombian Deputy Minister of Finance María Fernanda Valdés spoke at the conference in support of the UN tax convention.
Norwegian State Secretary Bjørg Sandkjær said:
“The current moment around global tax issues is very promising and this conference is testament to that. We are having a global conversation on how to tackle inequality that hasn’t happened before. Norway recognises the clear call for tax reform made by the African Group.
“The link between tax reform and the fight against inequality is central to Norway’s development objectives. More than just money, this is very much about trust. A global tax system that does not stop global tax evasion and even rewards those that partake in it, does not foster trust between taxpayer and government.
The minister added:
“Unless we make sure tax systems are fair and transparent, we undermine our governance systems and relationships with our citizens.
“There’s a real added value in a framework convention on tax that takes place under the auspices of the UN. We do need to be ambitious and raise the bar for outcomes that benefit all and are fit for purpose.
Colombian Deputy Minister of Finance María Fernanda Valdés said:
“Colombia has a strategic role in the on-going discussions. We are a developing country but also a member of the OECD. We believe our role in the discussions is to be a bridge to bring together these two worlds.
“The UN is the most legitimate place to hold universal and legally binding discussions on tax matters. We believe the agenda-setting process ensures that the interests of the Global South can be best represented at the UN. A legally binding instrument can avoid previous mistakes. A framework convention is a necessary and useful instrument, for both countries and companies.
“A UN tax convention should address the large inequalities that have emerged between the richest individuals and companies and poorest citizens and legal entities.”
The deputy minister laid out Colombia’s position at the conference on the negotiations, indicating what the country would like to see in the framework convention’s terms of reference. This included:
- That the UN Convention should establish a Conference of the Parties as a decision making body where all states can meet to update existing standards and agree to further commitments to address emerging tax challenges.
- The establishment also of a secretariat and a proper institutional architecture for the implementation of the convention.
- The creation of a trust fund to finance the participation of representatives of developing countries in the process of negotiation of the framework convention.
The minister also laid out the issues that Colombia considers to be substantive to the negotiation process. These include:
- Taxation of high net worth and ultra-high net worth individuals.
- Non-Pigouvian tax measures to finance climate action, such as a global corporate income tax.
- Measures to curb illicit financial flows related to tax and trade.
- Taxation of cross-border services
EU countries are among the world’s biggest losers to tax havens, accounting for more than a quarter of global tax losses. EU countries are estimated to lose over €150 billion in tax revenue a year to tax havens – the equivalent to nearly 11% of EU countries’ combined public health budgets. Of this loss, a little over half is lost to multinational corporations using tax havens and the rest is lost to wealthy individuals doing so. The EU’s biggest losers is France, which loses €39 billion a year to tax havens. France led the EU bloc at the UN last year to vote against a UN tax convention.
The EU is also home to some of the most harmful tax havens in the world. Netherlands, Luxembourg and Ireland are together responsible for 22% of all tax losses countries suffer to tax havens. Netherlands costs the rest of the world about €70 billion in tax losses a year, Luxembourg costs others €33 billion in tax losses a year, and Ireland costs others €23 billion.
Reversing EU countries’ tax losses would provide EU countries with €350 more per citizen to spend every year. But many conference speakers were keen to emphasise the additional ways in which people living in the EU would benefit from a UN tax convention, beyond having bigger public pots to spend on services, infrastructure and markets.
A UN tax convention would strengthen national security across the EU, conference speakers argued, by strengthening transparency standards that the OECD has watered down in the past. This would finally empower governments to properly detect and freeze dirty money entering the EU and to effectively enforce sanctions against Russian oligarchs.
Conference speakers also emphasised that a UN tax convention would protect people’s human rights by giving weight to the link between tax policy and the human rights obligations of states, which the UN has increasingly recognised in recent years following a growing body of evidence on the impact of tax policy on people’s human rights.
The UN has recently challenged Ireland for possibly violating the Convention on the Rights of the Child with its tax haven policies. Research by St Andrews University and Leicester University estimates that if the tax losses countries suffer to Ireland’s tax haven policies were reversed, the deaths of three children under the age of five could be prevented every day, and 120,000 more children would be able to attend school each year.
UN negotiations currently underway will culminate in a vote near year-end on the parameters and scope of a possible UN tax convention. If successful, formal negotiations will be held next year on the terms and details of the convention leading to a final vote to make the convention official. The UK and EU countries, led by France, were accused last year of negotiating in bad faith and trying to “kill” the proposal to begin negotiations on a UN tax convention. OECD member countries attempted to undermine the start of the UN negotiation process last month by making requests for stringent and unsustainable decision-making rules to be applied in negotiations that break from normal process, but with that defeated, there is a sense that OECD members may now engage more positively on the substantive issues.
Polling in several EU countries has shown overwhelming public support for governments to clamp down on corporate tax abuse.10 Leading European economists have repeatedly made public statements and signed public letters calling on EU governments to support a UN tax convention.11 European NGOs and unions have similarly signed public letters calling on EU governments to do the same.
Thomas Piketty, economist and professor of economics at the School for Advanced Studies in the Social Sciences, said:
“In November 2023, the UN adopted with a very large majority the Africa Group resolution for a global convention to transform the international tax system. All BRICS countries voted yes. Unfortunately, the US, France and other rich countries from Europe and elsewhere voted no. In effect, rich countries seem to prefer to keep discussions on global tax reform in their rich club (OECD). This is an historical mistake that urgently needs to be repaired. A global reform of the international tax system is badly needed, including a minimal tax on multimillionaires and multinationals benefiting all countries on the basis of their social needs and exposure to climate change. This requires a global forum where all world regions are properly represented. We hope this conference can contribute to this discussion.”
Alex Cobham, chief executive at the Tax Justice Network said:
“Some are trying to frame the UN negotiations as a cake slicing contest between rich countries and poor countries, with rich countries supposedly being asked to give up some tax so that poorer countries can have a bigger slice. That’s plain wrong. A UN tax convention means more tax revenue for all countries, except for the most extreme tax havens. There’s more than twice as much wealth hidden offshore beyond the rule of law than there are dollars and euros in circulation today. A UN tax convention isn’t just about how we slice the cake between countries, so much as it is about stopping the cake being stolen from all of us.”
Dereje Alemayehu, executive coordinator at the Global Alliance for Tax Justice said:
“We’ve heard too much from OECD members, including the EU, about the need to avoid duplication of the OECD’s processes. But the truth is that there is no duplication: the UN is designed to facilitate globally inclusive, participatory and transparent decision-making, and the OECD is explicitly not. Rather than pretending that the world can set tax rules in a rich country members’ club which lacks transparency, inclusivity and any appropriate rules for decision-making, European leaders should fully support this inclusive and transparent negotiation at the UN, and support the UN tax convention as a historic opportunity to curb the large-scale tax abuse which their countries suffer along with the rest of us.”
Tove Ryding, policy and advocacy manager at Eurodad, said:
“EU states keep warning that a UN tax convention will duplicate the work of the OECD but are failing to communicate to their people that a UN tax convention would go far beyond anything the OECD has done and has the potential to drastically improve people’ lives and strengthen economies. The OECD was never designed as a forum for global political decision-making, so it’s hardly surprising that it hasn’t managed it. But now is the time to start answering the questions about what this new UN Tax Convention should look like. That is why we’ve gathered here today. It is also time to call on European governments to engage fully in the biggest tax shakeup in history and get behind the negotiation of an ambitious UN tax convention.”
Lucas Chancel, Co-Director of the World Inequality Lab and Professor at Sciences Po and Harvard Kennedy School, said:
“Let’s say it clearly: it is in European countries’ own interest to pursue global tax reform through the transparent and democratic framework of the United Nations, rather than through the OECD – rich countries’ club.”
“Adhering to a UN tax convention would alleviate Global South concerns regarding Western double standards and neo-colonial mindset. In addition, it is urgent to consider directing some of the revenues facilitated by new tax rules toward closing the global climate finance gap. Once again, the UN stands as the appropriate institution to do this.”
-ENDS-
Watch a recording of the ministers’ statements here.
Notes to editor
- The two-day conference runs from Thursday 14 March to Friday 15 March and bring together experts, policymakers, NGO’s and journalists from across Europe and beyond, to address questions of inequality and the global tax architecture and question the benefits for Europe and beyond. A livestream of the conference is available here. The conference programme is available here.
- For more information on countries losses to tax havens, see the Tax Justice Network’s State of Tax Justice 2023.
- Background information on last year’s UN vote is available here.
- More information on why the world needs UN leadership on global tax policy is available here.
- More information available here.
- See note 2.
- See note 2.
- The research on human rights impact of Ireland’s tax policies by the University of St. Andrews and Leicester University is available here.
- See this FT article for more information on last year’s negotiations.
- Polls from France, Germany, Italy, Poland and the Netherlands have all shown overwhelming public support for government action to curb global tax abuse.
- See this letter from leading economists supporting UN resolution.
- See this letter signed by over 200 NGOS and unions from around the world supporting UN resolution.