Historic shift towards a more democratic, transparent, and fair financial architecture
Despite the intense lobbying by the OECD countries to stop it, the resolution submitted by Nigeria on behalf of the 54-member African group of states, mandating the UN to take on a global tax leadership role was adopted by consensus on 23 November!
The OECD has repeatedly failed to end global tax abuse, estimated to be $483 billion per year. The OECD’s so-called ‘Inclusive Framework’ has been incredibly exclusive. Rich countries dominated the discussion and, unsurprisingly, drafted biased tax rules benefitting them and the Multinational Corporations headquartered in their countries.
CSOs have been advocating for years to implement measures to tackle domestic tax base erosion and profit shifting – whereby companies move their profits to tax havens depriving governments of much needed tax revenue. There are clear solutions such as public asset registers, automatic exchange of information, beneficial ownership and public country-by-country reporting. The frustration with the OECD and the perpetuation of a skewed international financial architecture rooted in colonial power relations led African Ministers of Finance to call for a UN Tax Convention and push for a vote on the floor of the UN General Assembly. The G77, established in 1964, which has increased to 134 countries, represents a clear majority in the UN, and their support proved pivotal despite opposition from the rich countries that are OECD members. The resolution was adopted by consensus, although the US tried an amendment to water it down.
This resolution mandating the UN to take on a global tax leadership role is a key milestone for a shift towards a more democratic, transparent, and fair financial architecture. But it is just the first step. Now we need to move towards a UN Tax Convention, with a UN Tax Body, to stop the complexity and power imbalance of the current bilateral treaties with their colonial legacy. It is a move towards decolonising the global financial architecture, where rich countries do not decide the fate of low and middle-income countries. Although it is not perfect and can be slow, the UN can offer equal footing to all countries, a neutral secretariat, and participatory and transparent processes.
This resolution paves the way for increasing domestic revenue through progressive taxation, making the super rich and multinational corporations pay their fair share, and stopping the diversion of tax revenue to tax havens. Much is at stake, not least in this time of climate crisis, economic recession, debt crisis, and hyperinflation, where austerity rather than tax justice is still being offered as a solution. We know that austerity leads to violations of human rights, undermines climate action, stifles development, and disproportionally affects women and youth. Ending global tax abuse is the answer. We need tax justice to adequately fund gender-responsive public services in all countries, as a part of a feminist just transition. Tax justice increases sustainability, democratic accountability, governance, transparency, participation, institutional quality, and human rights. Most recently, the Transforming Education Summit in September 2022 laid out how crucial action on tax justice is for accelerating progress on education.
Arthur Larok, Interim Secretary General, ActionAid International:
“ActionAid welcomes this resolution, enabling the global financial architecture to be decolonised, democratically negotiated, and more transparent. But this is only the beginning - we need to stop global tax abuse to fight poverty and injustice. We need adequate financing of gender-responsive public services to achieve social justice and gender equality, and to eradicate poverty”.
Ene Obi, Country Director, ActionAid Nigeria:
“More than ever, we are proud to be Nigerians, to be Africans, to work together with other countries in the G77 to fight the oppression and the unfairness of a colonial financial architecture. Tax justice is essential to further human rights for all and defeat poverty”.
Dr. Maria Ron Balsera, TaxEd Alliance Coordinator:
“This UN resolution is not only a victory for Tax Justice advocates, but for all CSOs working to secure human rights and public services. We need to build a strong civil society alliance at national, regional and global levels to advocate for and bring about commitments to increase the domestic financing of public education systems and other public services in a sustainable and progressive way”.
To contact the ActionAid press office email digital@actionaid.org.
About ActionAid
ActionAid is a global federation working with more than 15 million people living in more than 40 of the world’s poorest countries. We want to see a just, fair, and sustainable world, in which everybody enjoys the right to a life of dignity, and freedom from poverty and oppression. We work to achieve social justice and gender equality and to eradicate poverty.