This entry posted by Alison Holder, Policy Manager, Tax & Inequality, Oxfam GB, on 11 March 2015.
The time has come for developing countries to be on an equal footing when it comes to negotiations about global tax rules. This idea Oxfam has been pedalling for a while now, since the launch of our Business Among Friends report in May 2014, in fact.
Currently, the ways things are when it comes to corporate tax means that multinationals can exploit a frankly outdated tax system to shift profits and dodge tax. Big companies are running rings around the present tax system and our government leaders are letting them get away with it. It’s high time for the world to undertake a full overhaul of the tax system rather than just tinkering around the edges. And to do this, we need all countries – every single one - around the table with an equal voice in order to do this.
To this end, Oxfam welcomes the setting up of an independent commission of economic and political experts, known as ICRICT (Independent Commission Reform of International Corporate Taxation), which was announced today. Chaired by former UN Under-Secretary-General José Antonio Ocampo and including Nobel Prize winning economist Joseph Stiglitz, it has been established to propose reforms to the global tax system to ensure it works in the broader public interest. This can only be seen as a positive step in the inequality debate.
For the first time, an independent grouping of prominent economic experts and political leaders from around the world have been given the mandate to interrogate the current global tax system, warts and all. In this vein, they will consider alternatives for how a future tax system can better serve the public interest and the interests of developing countries.
The panel is made up of José Antonio Ocampo, Eva Joly, Rev. Suzanne Matale, Magdalena Sepúlveda, Léonce Ndikumana, Manuel Montes, Ifueko Omoigui-Okauru, Govinda Rao, and Joseph Stiglitz. They are expected to report on some of the most thorny issues in today’s global tax debates: issues such as fairer allocation of tax rights between countries where companies source their materials (more often developing countries) and countries where multinational companies are resident (more often rich countries), public country-by-country reporting, and requirements for corporations to reveal the location of financial assets. The list of issues to consider is hefty but necessary.
It is vital because the tax rules we live with today are from a by-gone era as they are essentially unchanged since the 1920s. This was a time when world trade was less than 1% of what it is today, when companies “resided” very clearly in one country and “sourced” from another, when the digital economy didn’t exist and it was much more difficult to manipulate your companies’ activities to take advantage of different tax regimes to pay less tax.
Today’s tax system is clearly something of yesteryear. It is not fit for purpose – let alone fair.
The Independent Commission on tax reform will meet for the first time next week in New York and will hear from business, academic, labour, governmental and civil society experts on potential reforms. Oxfam will be waiting eagerly to hear the impressions of these eminent Commissioners, and to get a more global and independent opinion on how to forge a fairer tax system for the future. We hope that the findings of the Commission will also inform Oxfam’s call for a World Tax Summit, where all countries come together to make tax fair and help close the gap between rich and poor.
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