Support for a UN Convention on inclusive and effective tax cooperation resounded in an international conference on tax justice here as the Convention is being deliberated at the UN. Independent experts and CSO leaders from the Philippines, Indonesia, Zambia, Argentina, Canada and other parts of the world, said that profit shifting and illicit financial flows rampant in extractive and other industries can only be ended through a comprehensive UN Tax Convention and democratic global tax governance under the UN. The OECD, which has long dominated the international tax policy arena, is an exclusive ‘club’ of rich countries that is not interested in protecting the rights and interests of developing countries, they said.
According to Lidy Nacpil, Coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD), the worsening multiple crises faced by countries all over the world “can only be effectively addressed through massive efforts by governments to guarantee peoples’ rights to public services and to a rapid, just, and equitable shift to renewable energy. This requires equally massive resources mobilized through equitable taxation that takes into account economic and social inequalities worsened by the multiple crises.” As such, Nacpil said that “the OECD’s Inclusive Framework on BEPS, which is designed to protect the interests of multinational corporations and rich countries, further weakens Global South countries’ ability to address their people’s needs and secure their rights.”
Leaders of Philippine organizations also slammed the government’s recent decision to sign on to the BEPS Framework. Rovik Obanil, Secretary-General of the Freedom from Debt Coalition, said: “The Philippines has committed a major blunder in becoming a member of the OECD’s BEPS Framework.” He added that the government “should know that the arrogation of international tax rulemaking by the world’s largest economies through the OECD/G20 Base Erosion and Profit-Shifting (BEPS) framework is fundamentally undemocratic, illegitimate, and biased towards the interests of countries, corporations, and wealthy individuals already benefiting from status quo tax rules.” He said that this adds another layer to the set of short-sighted tax policy decisions taken by the government since TRAIN and CREATE that have favored elite and corporate interests, shifting the burden of raising revenues to ordinary people, through indirect taxation.
Flora Santos, President of the Oriang Women’s Movement, said the Philippines should stand behind the UN Tax Convention currently being deliberated in the United Nations. “Women suffer the worst effects of deepening inequality in our society. The membership of the Philippines in the OECD’s BEPS framework will only worsen inequalities as we see that the OECD proposals on tax policies are pro-corporations and not pro-people.” Because of this, Santos stated that she and her organization are “one with tax justice networks for the immediate adoption of a UN Tax Convention and an intergovernmental tax mechanism under UN auspice.”
Nacpil, Obanil and Santos were among the CSO leaders gathered at the international conference on “Tax and Extractives: Make MNCs’ Pay Their Share, Rewrite Global Tax Rules” which ended last weekend. Independent experts and resource persons tackled issues in tax systems especially concerning mining and other extractive sectors. They noted the lack of financial transparency and accountability, aggressive tax avoidance and evasion by corporations, profit shifting and cross-border illicit financial flows and the granting of generous tax holidays and other incentives as revenue-eroding and fundamentally unjust and unfair. The negative impacts on communities, the environment, and local and national economies were highlighted.
Conference speakers and participants also expressed concern that rich countries of the Global North, through the OECD, are once again blocking the UN’s effort to democratize global tax governance. The OECD, aided by the IMF and driven by G7 and elite countries of the G20, has been pressuring the developing countries to join its Inclusive Framework on Base Erosion and Profit Shifting (BEPS). This has been criticized by leaders of the developing countries, independent experts, and CSOs for the past two years as a “Tax Deal of the Rich” that has nothing positive to offer to developing countries.
Dr. Dereje Alemayehu, Executive Coordinator of the Global Alliance for Tax Justice (GATJ), said that “signing on to OECD means signing away your taxing rights,” as the BEPS Framework only reinforces historically-rooted biases in the international tax architecture which benefit the Global North. Such biases leave Global South countries without the revenue sources to finance responses to the multiple crises. He noted that “the OECD is only scuttling the UN process because of growing support for the UN Tax Convention.”
Dr. Manuel Montes, Senior Adviser at the Society for International Development (SID), pointed out that “what is ultimately at stake in the current deliberations over UN Tax Governance is the chance for Global South countries to secure their just share of taxing rights.” He said that “the current international tax architecture, where OECD countries’ agendas dominate, is inequitable and unfair.”
Other resource persons, including Natalie Mwila from the Tax Justice Network Africa and Atty. Kim Henares of the Independent Commission for the Reform of the International Corporate Taxation (ICRICT) and former Commissioner of the Philippines’ Bureau of Internal Revenue, also added their insights about the pitfalls and risks, especially for developing countries, in joining the OECD’s BEPS Framework.
The international conference was organized by the Tax and Fiscal Justice-Asia (TAFJA), Global Alliance for Tax Justice (GATJ), and the Canadians for Tax Fairness (C4TF) in collaboration with the Asian Peoples’ Movement on Debt and Development (APMDD) from 9 to 11 November 2023 in Quezon City. They count among the over 200 CSO leaders who signed an open letter last 3 November 2023 declaring support for the UN draft resolution that aims to promote inclusive international tax cooperation towards effectively ending corporate profit shifting and other tax abuses and illicit financial flows.
About the conference, Jeannie Manipon of TAFJA and APMDD said: “Our agenda here is to forge solidarity for tax justice, and discuss solutions to the rampant tax and labor abuses, and other unjust practices in the extractive sector and other industries all over the world. Reforming the international tax system under the auspices of the UN, where all countries can negotiate and stand on equal footing, is one critical step towards an international solution. We face a unique moment of multiple crises but also a historical opportunity that should be met by the international community with strong political will and just and equitable solutions.”
Timmy Magalang (+63) 917 1745570
John Lazaro (+63) 917 674 0929