The minority of countries who voted against plans adopted at the UN yesterday for historic global tax reforms are responsible for three-quarters of all countries’ losses to tax havens, the Tax Justice Network reports. These countries – consisting mostly of OECD member countries who almost exclusively decided global tax rules for the rest of the world rules for decades – cost countries $359 billion in tax losses a year.1
Comparing the representation of the global population between countries for and against yesterday’s vote is particularly telling given that the vote boiled down to overwhelming demand from countries outside the OECD for a meaningful voice on global tax rules which they have historically been denied.
The minority of countries who voted against yesterday’s resolution for more inclusive decision-making at the UN represent 15 per cent of the global population. Those who voted for the resolution represent 80 per cent.
Alex Cobham, chief executive at the Tax Justice Network, said:
“These numbers cut to the heart of what happened at the UN vote. The world united to fight global tax abuse together, and the small circle of countries fuelling that tax abuse tried and failed to stop them.
“The fight against global tax abuse is in equal measure a fight for democracy and freedom. The governments of the US, UK and EU countries should be ashamed of their actions yesterday – and they should demonstrate they have learned a lesson by taking up the magnanimous invite that the rest of the world extended, even after the vote, to cooperate inclusively at the UN.”
“This is a historic victory delivered by countries of the global South, for the benefit of people all around the world. We commend the leadership of the Africa Group on this work, as well as the important work and growing engagement of Latin American and Caribbean nations, where the championing of this work by Colombia’s former Finance Minister Jose Antonio Ocampo in particular has been instrumental.”
The UN adopted by a landslide majority yesterday the Africa Group’s resolution to begin the process of establishing a framework convention on tax and completely change how global tax rules are decided. Nearly two-thirds (125) of countries at the UN voted in favour of the reforms. 48 countries voted against the resolution and 9 abstained. The US, UK and all EU member countries voted against the resolution.2
The adoption of the resolution has been widely celebrated by government officials, economists and civil society organisations around the world.3
Global rejection of OECD process
The UN vote is widely seen as a wide rejection of the OECD’s leadership on global tax rules. The framework convention on tax which countries will now begin working towards can eventually move decision-making on global tax rules from the OECD – a small club of rich countries where this has sat for over 60 years – to the UN.
The majority of votes against the resolution (31 out of 48 votes) came from OECD members. All but two members of the G77, which the OECD has attempted to win over in recent years, voted in favour of the resolution. The two members of the G77 who did not vote in favour of the resolution are OECD members Costa Rica and Mexico, who abstained despite significant pressure on them from the wider OECD membership to vote against the resolution.
In total, more than 1 in 6 OECD members broke ranks from the OECD bloc’s position of voting against the resolution and instead either supported or abstained. Chile and Colombia supported the resolution; Costa Rica, Mexico, Turkey, Iceland and Norway all abstained.
In addition, fully two thirds of the (non-OECD) members of the OECD’s Inclusive Framework supported the resolution to develop a genuinely inclusive framework at the UN instead.
An OECD ‘Statement by the Secretary General on International Tax Cooperation’4 issued shortly after the vote failed to recognise or engage with any of the grievances or desires for change expressed by countries at yesterday’s vote. The statement did not mention the resolution adopted at the UN nor acknowledge that the historic vote had even taken place, which was largely seen as a vote of no confidence in the OECD’s leadership on global tax policy.
Alex Cobham said:
“The OECD has shown no humility about the fact that so many countries, including some of its own members, resisted its intense lobbying and instead rejected its continuing monopoly over international tax rules. More than a hundred countries – the governments of 4 out of every 5 people on the planet – united at the UN to say they’re fed up of not being heard at the OECD. And the OECD responded by refusing to even acknowledge the vote took place! If the OECD hopes to support its members in the UN process that will now get underway, it’s hardly an auspicious start.”
Notes to editor
- Research published in July this year by the Tax Justice Network found that the world loses $480 billion in tax a year to multinational corporations and wealthy individuals using tax havens and secrecy jurisdictions to abuse tax. Our comparison today of these losses against votes at the UN yesterday reveals that 75 per cent of these losses were facilitated by the countries who voted against yesterday’s resolution and their dependencies. Our research from July this year reported that countries will lose nearly $5 trillion to tax havens over the next 10 years by staying the course with OECD leadership on tax rules. A framework convention on tax, we reported at the time, is the world’s best shot at avoiding that astronomical tax loss.
- More information on the resolution and vote is available in our statement here. The UN’s official tally of votes on yesterday’s resolution is available here.
- A round up of statements and media coverage on the vote is available on our live blog here.
- Read the OECD’s statement here.