The UN tax committee has agreed by consensus guidance on designing wealth tax laws, opening the door for countries to tax extreme wealth.[1] It is estimated that there is more than twice as much wealth hidden offshore beyond the rule of law than there are printed dollars and euros in circulation today.
The UN guidance will provide countries with a blueprint to implement at home, giving countries both the technical know-how and political backing to tax the wealth of the richest members of society – something that most countries have shied away from under fierce lobbying pressure. Approval for the drafting of a model law included in the guidance was briefly delayed following requests from some countries for minor changes, including relabelling the “model law” as an “example law”.
Nonetheless, the agreement on the guidance signals a historic shift in global consensus on taxing extreme wealth and is the latest demonstration of the UN’s ability to push the needle on tax reform at a globally inclusive scale.
Contrary to expectations, the OECD and other objectors who had voiced opposition to the model law in previous committee sessions did not make a decisive intervention during Thursday’s meeting.[2] Analysts at the Tax Justice Network suspect that the recent prioritisation of wealth taxes by the G20, championed by Brazil, was a factor behind the lack of pushback. The transparency and public scrutiny of UN discussions, compared to the closed-door opacity of OECD processes, may also have reduced the willingness to take blocking positions.
Alex Cobham, chief executive at the Tax Justice Network said:
“This is another victory on tax secured at the UN through the leadership of global South countries, but for the benefit of people everywhere. Enhancing the technical and political space for national governments to pursue progressive tax measures will, over time, allow countries to generate greater revenues to invest in inclusive public services, while at the same time tackling the extreme wealth inequalities that damage all of our societies. We’re starting to see a consistent pattern, where the transparency of tax discussions at the UN leads to much better outcomes. The concurrent process to negotiate a UN framework convention on international tax cooperation offers the world an unprecedented opportunity to lock in that dynamic, and finally to fix the international tax rules that cost us all so much.”
The South Centre, an intergovernmental organisation of developing nations, also welcomed the news on social media today, stating:
“The @South_Centre welcomes the decision by the @UN Tax Committee @UNDESA to commence the preparation of UN Model Wealth Tax legislation, also supported by Brazil @g20org & Colombia @MinHacienda. We will continue contributing to this work of the UN Tax Committee.”[3]
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Notes to editor
- The UN tax committee (the Committee of Experts on International Cooperation in Tax Matters) is a committee of tax experts nominated by, but not formally representative of, UN member governments. They work to promote better tax policy measures, and have often advanced measures that ensure developing countries are also able to benefit. The meeting this week is held in New York, and the full details and agenda are available here.
- See our press advisory shared yesterday about concerns that the OECD and some of its members might attempt to block progress at the UN tax committee.
- See the South Centre’s tweet here.