As a key milestone to COP 26 and avowed supporter of common action for climate, biodiversity and the UN Sustainable Development Goals, the #FinanceinCommonSummit2021 must ensure that public development banks and the governments that control them must commit to take bold, rapid and concrete steps in the right direction to address the multiple crises that the world, especially the Global South, continue to face. We reiterate our calls to
• End public financing of fossil fuels now!
• Stop public financing of industrialized agricultural systems!
• Cancel unsustainable and illegitimate debts of developing countries!
Philippine government should reject the OECD-G7-G20 “tax deal of the rich” - FDC
MANILA, 24 September 2021 –“We have delivered our message to the Philippine government on the certain negative impact of a tax deal forwarded by wealthy countries. The Philippine government must act in the best interest of the Filipino people. This means rejecting the tax proposals of the Group of 7, the Group of 20 and the OECD,” said Rovik Obanil of the Freedom from Debt Coalition (FDC) who headed a delegation that delivered an open letter to the government through the Department of Finance on Thursday, September 23.
The open letter of the FDC and the Asian Peoples’ Movement on Debt and Development (APMDD) asked the Philippine government take a stand against tax abuses and block tax deals put forward by the OECD, G7, and G20 that will benefit only rich countries, multinational corporations and the global elite.
The open letter noted that “in 2020, illicit financial outflows from corporate tax evasion and avoidance by multinational corporations (MNCs),in the Philippines was estimated at PhP 94.3 billion, nearly equivalent to the budget allocated by the Bayanihan to Heal as One Act for social amelioration and wage subsidies. While MNCs continue to engage in these abusive tax practices, the burden of revenue generation is passed on to the poor through regressive taxes such as the Value-Added Tax (VAT) and excise taxes on necessary goods.”
The letter was delivered at the DOF by a small delegation at the same time as a rally was being held at the Welcome Rotonda by APMDD, FDC, Oriang and Sanlakas. The delegation coming from the DOF office and another delegation that delivered a similar open letter to the Embassy of Indonesia only arrived at Welcome Rotonda to see the tail-end of the public action which police forcibly though peacefully dispersed.
The rally dubbed Day of Action for Tax Justice was held as representatives of 193 member States met at the 76th session of the United Nations to deliberate on ‘COVID-19 recovery’ and how to rebuild sustainably.
Earlier, APMDD’s Lidy Nacpil noted that “Despite official statements on strengthening domestic resource mobilization, the Two-Pillar “solution” of the OECD Inclusive Framework on Base Erosion and Profit-Shifting (BEPS) opens numerous loopholes for multinational corporations (MNCs), especially those operating in developing countries, to continue abusive tax practices detrimental to revenue generation.
“These false solutions yield an unjust share of revenues to headquarter countries of MNCs and accelerate a global race to the minimum corporate tax rate of 15%, further eroding our revenue bases. The Inclusive Framework is no more than a “tax deal of the rich,” favoring a few countries that have long benefitted from our flawed global tax system,” Nacpil said. . -30-
The letter to the Government of the Philippines:
As peoples and organizations committed to the transparent, accountable, and just restructuring of tax systems, we call on governments to take urgent measures to make tax and fiscal policies more responsive to the needs of people and the planet and reject policies and initiatives that will exacerbate inequalities within countries and across countries such as the OECD-G7-G20 Tax Deal.
The COVID-19 pandemic and its impacts on our citizens present a historic opportunity to transform tax systems. Given the urgency of providing solutions to these pressing needs, it is lamentable that proposals by the world’s richest nations fail to address fundamental inequities in our global tax architecture.
Despite official statements on strengthening domestic resource mobilization, the Two-Pillar “solution” of the OECD Inclusive Framework on Base Erosion and Profit-Shifting (BEPS) opens numerous loopholes for multinational corporations (MNCs), especially those operating in developing countries, to continue abusive tax practices detrimental to revenue generation. These false solutions yield an unjust share of revenues to headquarter countries of MNCs and accelerate a global race to the minimum corporate tax rate of 15%, further eroding our revenue bases. The Inclusive Framework represents no more than a “tax deal of the rich,” favoring a few countries that have long benefitted from our flawed global tax system.
These high-income countries and legislative lobbies for MNCs are expediting the adoption of the agreement globally to forestall demands by developing countries and civil society. This underlines the essential responsibility of governments in disadvantaged countries to assert equal rights to decide on global tax rules in an intergovernmental platform where all countries sit at the table as equals.
The Asian Peoples’ Movement on Debt and Development (APMDD) strongly urges governments in Asia to reject the OECD-G7-G20’s “tax deal of the rich” and heed civil society demands for democratic, inclusive, and transformative global tax architecture. Under the banner of the 2021 Nobel Peace Prize Nominee – the Global Alliance for Tax Justice (GATJ) – civil society reiterates the call for the establishment of a universal, intergovernmental UN tax commission and negotiating a UN tax Convention to comprehensively address tax havens, tax abuse by multinational corporations and other illicit financial flows.
Make taxes work for people!
Yours in tax justice,
Coordinator, Asian Peoples’ Movement on Debt and Development
NOTE: The Open Letter in PDF is available here: An Open Letter to Asian Governments: Reject the Tax Deal of the Rich PDF
A call on civil society organisations from around the world to reject the forthcoming G7/G20/OECD tax deal
The COVID-19 pandemic and its impacts present a historical opportunity to reform global corporate taxation and transform our tax systems to make them more responsive to the needs of people and the planet. It is unconscionable that the solutions offered by the world’s elite countries only serve to reinforce inequalities in the global tax regime that have long excluded the voice and interests of developing countries and peoples in the Global South.
The Global Alliance for Tax Justice and many in the tax justice movement were critical regarding the leadership role of the OECD, which is a club of the rich, to reform international tax rules. To give its leadership the veil of legitimacy it created an Inclusive Framework (IF), which has so far barely gone beyond rubberstamping the Group of Seven (G7) “deal of the rich”. The proposals in the OECD-led Inclusive Framework’s statement on July 1 for new global tax rules, do not address the fundamental problems of the current international tax architecture. It is designed to accommodate the recent deal of the G7 on a global minimum corporate tax rate of 15%, and disregards the suggestions, proposals and reservations that a number of developing countries have put forward throughout many years of work.
The “solutions” do not address the root causes of the current practices and rules that incentivise profit shifting and facilitate tax dodging with impunity. Limiting the scope of the OECD/IF Pillar 1 “solution” to a hundred or so multinational corporations (MNCs) will not enable developing countries to raise more tax revenue from all MNCs. The agreed global minimum tax rate of 15% in Pillar 2 is far lower than the world corporate income tax rate average of approximately 25% and closer to the 12.5% proposed by some low/no tax jurisdictions. Setting the global minimum at this level would not do much to benefit the big group of developing countries who have much higher statutory corporate tax rates. Instead of stopping the “race to the bottom” tax competition, this low rate will put countries with a higher corporate income tax rate into a “race to the minimum”. In addition, as proposed by the OECD, Pillar 2 would give the great majority of new revenues to the (OECD) headquarters countries of multinationals, instead of the lower-income countries that lose the highest share of their tax revenues due to the failures of the current rules.
Far from ensuring the taxing rights of developing countries, the “solutions” will limit the right to tax of source countries to a small proportion of MNCs’ profits and entrench taxing rights to headquarter countries over global profits. The institutional arrangement in which these “solutions” are being “negotiated” lacks legitimacy, transparency and accountability. The “negotiations” behind closed doors expose developing countries’ representatives to political pressures and manipulation to agree to the deal of the rich.
A solution agreed in a politically biased and opaque process, outside the UN system and the related accountable country representation, cannot have the legitimacy to be a binding international agreement. A fair global deal is only possible in an open, fully inclusive and transparent intergovernmental process, in which the public and civil society can hold negotiators to account for proposals and decisions, and in which the draft agreements are open to public scrutiny. Such a process is only possible within the framework of a UN based intergovernmental negotiation in which countries can participate as equals.
We therefore reiterate our call for the establishment of a universal, intergovernmental UN tax commission and negotiating a UN Tax Convention to comprehensively address tax havens, tax abuse by multinational corporations and other illicit financial flows. We call upon countries to overcome the blockage to bring reform of international tax rules into the UN and work together for a truly inclusive and transparent negotiation process.
In order to endorse this statement and add your organisation to the list of signatories, please fill in this form until 4 October 2021 at 5pm (EST)
Note: The full statement of Global Alliance for Tax Justice with Spanish translation is available here: GATJ Statement on the forthcoming G7-G20-OECD tax deal PDF
With the rubber stamp of the G7 and the G20’s finance ministers earlier this year, the world’s wealthiest countries are doubling down on efforts to enact an inequitable and undemocratic tax deal for all countries to adopt. It is imperative for civil society organizations and governments to strongly reject this “tax deal of the rich” and rebuild our broken tax and fiscal systems to make them work for people and the planet. This can only be done under the auspices of genuinely inclusive, democratic, transparent, accountable and transformative governance mechanisms.
Failing to heed the painful lessons of the pandemic, international financial institutions as well as many governments in the Global North and South continue to pursue the same neoliberal agendas that have privileged the interests of multinational corporations. Their policies have thus prioritized profits over people and the planet, and have caused the failure of public services that has led to more deaths and pandemic casualties.
To finance COVID-19 response programs, governments have turned to more and more loans on the one hand and adopted regressive and revenue-eroding tax policies on the other. We see an alarming trend towards reduced taxation of corporate profits and more generous tax breaks and fiscal incentives for multinational corporations. In the global battle to transform tax policy, we face the menacing threat of a ‘tax deal’ that will only benefit rich countries, MNCs and the global elite, with devastating consequences for the poor.
A year ago, while grappling with the pandemic’s immediate effects and the ‘new normal’ of pandemic-related lockdowns, we came together in collective action to demand for tax justice in the face of COVID-induced crises. Today the pandemic rages on and inequalities are widening. Government responses to deal with the multiple crises have not only been inadequate, they fail to address the systemic issues that have been part of the root causes of the multiple crises. To meet the urgent needs of our communities today, we need fiscal systems and global tax rules that serve to reduce the entrenched inequities and injustices of tax norms and rule-making at the national and global levels.
We demand governments in Asia to:
ADOPT tax and fiscal policies that truly respond to the needs of people and the planet, reduce unjust tax burdens on people, fairly tax the wealth of elites and corporations , and that serve to reduce inequalities and enable the realization of human rights and sustainable development. BUILD inclusive, transformative and sustainable economies that genuinely serve the needs, interests, and futures of people and the planet.
REJECT the OECD/G20 global tax deal and other initiatives that reinforce inequalities in decision-making around global tax rules or serve only the interests of multinational corporations and a few elite countries;
END the global race to the bottom of corporate tax rates , stop illicit financial flows, and fight for a more equitable distribution of taxing rights;
PUSH TOWARDS the formation of a genuinely inclusive, democratic, and transparent intergovernmental Tax Body under the auspices of the United Nations.
The Asian Peoples’ Movement on Debt and Development (APMDD) calls on its members, partners, and all tax justice advocates to scale up campaigning to push for national and global tax justice demands, and especially to join forces and launch coordinated actions and activities on September 23, 2021.
MAKE TAXES WORK FOR PEOPLE! REJECT THE TAX DEAL OF THE RICH!