Oxfam International Blogs - OECD http://l.blogs.oxfam/es/tags/oecd es 4 critical steps to ensure international aid works for the poorest people http://l.blogs.oxfam/es/node/81830 <div class="field field-name-body"><p><em><strong>After four years of vexed negotiations on aid to the private sector, it’s time for a more radical rethink.</strong></em></p> <p>Last week we <a href="https://blogs.oxfam.org/en/blogs/19-01-10-why-2019-make-or-break-year-international-aid">blogged</a> about three distinguished aid insiders’ grave concerns over proposals for recording support to the private sector as Official Development Assistance (ODA). Today we turn our attention from the conference halls of the Organisation for Economic Cooperation and Development’s Development Assistance Committee (DAC), to the marginalized communities who are ultimately affected by the DAC’s decisions.</p> <p><span style="font-size: 1.231em; font-weight: bold;">Marginalized people counting the cost: the Lake Turkana Wind Power project</span></p> <p><span style="font-size: 13.008px;">The Lake Turkana Wind Power project in Kenya illustrates some of the many risks that aid subsidies to the private sector (known as private sector instruments or PSI) pose for people experiencing extreme inequalities.</span></p> <p>Reported to be the largest private investment in Kenya’s history, the project involved building 365 turbines and other infrastructure on grazing lands used by indigenous pastoralists. Much of the project’s financing came from official sources in the global north, including some ODA.</p> <p><a href="http://siplf.org/our-declaration/">Local</a> and <a href="https://www.iwgia.org/images/publications/0725_REPORT21.pdf">international </a> civil society groups have raised serious red flags about land grabbing and inadequate consultation with local indigenous peoples – and about a lack of accountability.</p> <p>The World Bank <a href="https://www.businessdailyafrica.com/Kenya-Power-deal-that-forced-World-Bank-out-of-wind-farm-/-/539546/1538602/-/tvegggz/-/">withdrew </a>from the project citing concerns that the terms of the deal would leave the Kenyan people footing too big a bill – and that was even before Kenyans were hit with heavy <a href="https://www.nation.co.ke/business/Kenya-Power-billed-for-idle-wind-farm/996-4075132-ikk598z/index.html">extra costs</a> due to delays following the bankruptcy of one contractor. Meanwhile, much of the financial return from the project looks set to flow to companies in the global north, including <a href="https://ltwp.co.ke/project-partners/">Vestas</a>, <a href="https://ltwp.co.ke/project-partners/">Siemens</a> and <a href="https://www.vestas.com/en/media/~/media/38a166a7ec1e4892a28b32d9beb79af5.ashx">Google</a>. While indigenous peoples’ lands and livelihoods came under threat, and people across Kenya shouldered heavy costs, the companies involved are positioned to profit.</p> <p><span style="font-size: 1.231em; font-weight: bold;">A raft of unresolved risks, little proven benefit</span></p> <p><span style="font-size: 13.008px;">Sadly, the risks exposed by this project are only the tip of the iceberg. Based on detailed analysis of the proposals tabled at the DAC, and evidence from other damaging PSI projects, our civil society coalition has long been flagging a catalogue of risks that need urgent attention, including that:</span></p> <ul><li><a style="font-size: 13.008px;" href="https://eurodad.org/Entries/view/1546844/2017/11/21/Mixed-messages-the-rhetoric-and-the-reality-of-using-blended-finance-to-leave-no-one-behind">ODA will be diverted</a><span style="font-size: 13.008px;"> from other activities of greater importance to people experiencing extreme poverty and inequalities; </span></li> <li>Basic rights may be jeopardised by the <a style="font-size: 13.008px;" href="https://policy-practice.oxfam.org.uk/publications/equity-and-quality-in-an-education-public-private-partnership-a-study-of-the-wo-620529">commercialisation of social sectors</a><span style="font-size: 13.008px;">; </span></li> <li>Significant sums of ODA may be invested without any clear added value. A <a style="font-size: 13.008px;" href="http://www.oecd.org/publications/making-blended-finance-work-for-the-sustainable-development-goals-9789264288768-en.htm">recent OECD report</a><span style="font-size: 13.008px;"> on one key type of PSI found that as yet ‘little reliable evidence has been produced linking initial … efforts with proven development results’.</span></li> <li>There will be an increase in <a style="font-size: 13.008px;" href="https://eurodad.org/development-untied-2018">tied aid</a><span style="font-size: 13.008px;">; </span></li> <li>Subsidised companies may <a style="font-size: 13.008px;" href="https://d1tn3vj7xz9fdh.cloudfront.net/s3fs-public/bp-dfis-responsible-corporate-tax101116-en.pdf">dodge their taxes</a><span style="font-size: 13.008px;">; </span></li> <li>An increase in PSI lending will exacerbate <a style="font-size: 13.008px;" href="https://eurodad.org/EP-debt-crisis-blog">emerging debt crises</a><span style="font-size: 13.008px;"> in the global south; and </span></li> <li>Core development effectiveness principles such as local ownership of development priorities, <a style="font-size: 13.008px;" href="https://www.oxfam.org/en/research/open-books-how-investments-financial-intermediaries-can-be-transparent-and-why-they-should">transparency</a><span style="font-size: 13.008px;"> and accountability; human rights obligations; and environmental commitments will be overlooked.</span></li> </ul><p><span style="font-size: 1.231em; font-weight: bold;">Putting politics before people</span></p> <p><span style="font-size: 13.008px;">As the guardian of ODA standards, the DAC has a unique responsibility to tackle these risks in the rules that it sets for PSIs. But – despite over four years of negotiations – its </span><a style="font-size: 13.008px;" href="http://www.oecd.org/dac/Private-Sector-Instruments.htm">provisional reporting arrangements</a><span style="font-size: 13.008px;"> released last month fall far short.</span></p> <p>It’s true that any kind of agreement on reporting – minimal as it may be – is significant, given that at least one major player was threatening to torpedo the process right up until the last minute. The agreement sends a signal that DAC donors still value an aid system based on collective rules, which is critical in a context where multilateralism is under threat.</p> <p>But this agreement came at the heaviest of prices. While the interests of a few powerful governments held sway, the interests of people on the receiving end of ODA were all too often sacrificed, under increasingly diluted proposals which are <a href="https://eurodad.org/Oxfam-Eurodad-reaction-OECD">completely silent</a> on most of the key risks associated with PSI, or else undermined by vagueness.</p> <p><span style="font-size: 1.231em; font-weight: bold;">Where next?</span></p> <p><span style="font-size: 13.008px;">Getting out of the current impasse won’t be easy. But, with the credibility and impact of Official Development Assistance at stake, the status quo just isn’t a long-term option.</span></p> <p>We urgently call for four key steps from Development Assistance Committee members:</p> <ol><li><strong style="font-size: 13.008px;">Implement the provisional reporting arrangements</strong><span style="font-size: 13.008px;"> as rigorously as possible. Donors that opt out of any voluntary provisions should be called out for putting ODA in jeopardy.</span></li> <li><strong style="font-size: 13.008px;">Don’t let the weaknesses in the provisional reporting arrangements become an excuse</strong><span style="font-size: 13.008px;"> for a race to the bottom on standards at national level. Rather, the vacuum in detailed rules from the DAC makes it more vital than ever for principled national aid agencies and development finance institutions to strengthen their own safeguards over their PSI activities. The recommendations in our latest civil society position would be a good place to start – and we particularly emphasise the prevention of ODA diversion, and the importance of upholding human rights obligations and putting in place strong accountability mechanisms.</span></li> <li><strong style="font-size: 13.008px;">Don’t drop the ball on the Private Sector Instruments issue</strong><span style="font-size: 13.008px;">: don’t let the provisional reporting arrangements become permanent by default. The reform can only be successful if all parties – including countries in the global south and civil society organisations – are consulted throughout the process.</span></li> <li><strong style="font-size: 13.008px;">Use this opportunity to take a step back and reimagine</strong><span style="font-size: 13.008px;"> what the ODA system might look like if it was squarely aligned to the principles of maximising development impact for the very poorest and most marginalised people to leave no-one behind, of avoiding harm, and of concessionality being non-negotiable. The answer might make uncomfortable reading for finance ministries eager to get the biggest ODA bang from their PSI bucks.</span></li> </ol><p>For millions of people like the communities around Lake Turkana, whose voices are rarely heard in the DAC’s negotiations, such a rethink cannot come a moment too soon.</p> <p><em>This entry posted on 14 January 2019, by Polly Meeks (Senior Policy and Advocacy Officer at Eurodad), Julie Seghers (OECD Policy and Advocacy Advisor at Oxfam) and Jiten Yumnam (Secretary General of the Centre for Research and Advocacy, Manipur). Second of a <a href="https://blogs.oxfam.org/en/blogs/19-01-10-why-2019-make-or-break-year-international-aid">two-part series</a>.</em></p> <p><em>Photo: The Lake Turkana Wind Power Project in Loiyangalani district, Marsabit county, Kenya. Credit: Jack Owuor/The Star Newspaper</em></p> <p><em>(1) Source: analysis of activity level data in the OECD DAC Creditor Reporting System database, and local civil society analysis.</em></p> </div><div class="field field-name-title"><h2>4 critical steps to ensure international aid works for the poorest people</h2></div> Mon, 14 Jan 2019 15:20:22 +0000 Guest Blogger 81830 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/81830#comments Why 2019 is a Make-or-Break Year for International Aid http://l.blogs.oxfam/es/node/81826 <div class="field field-name-body"><p><strong>Don’t just take our word that aid is in danger: former OECD heavyweights agree</strong></p><p><em><span>By Polly Meeks (Senior Policy and Advocacy Officer at Eurodad), Julie Seghers (OECD Policy and Advocacy Advisor at Oxfam) and Jiten Yumnam (Secretary General of the Centre for Research and Advocacy, Manipur). First in a <a href="https://blogs.oxfam.org/en/blogs/19-01-14-4-critical-steps-ensure-international-aid-works-poorest-people">two-part series</a>.</span></em></p><p><span></span><span><strong>Nothing says ‘happy holidays’ like a scathing criticism</strong> of how the OECD is handling the ‘modernisation’ of overseas aid reporting, right? But an <a href="https://www.brookings.edu/blog/future-development/2018/12/21/dont-undermine-the-basic-architecture-of-oecd-dac-statistics-a-letter-of-warning/" rel="nofollow">open letter</a> published just before the festive break did offer two crucial holiday ingredients, at least for anyone with an interest in the quality of official development assistance (ODA): a rare chance to hear from long-standing acquaintances, and some fundamental reflections on vital issues for the year ahead.</span></p><p><span></span><span>The letter in question came from three former top-level experts from the OECD’s Development Assistance Committee (DAC): J. Brian Atwood and Richard Manning, two former DAC chairs, and Hedwig Riegler, a former chair of the DAC working party on statistics.</span></p><p><span></span><span>The main topic of the letter was the DAC’s heated debate over new rules on how to count so-called Private Sector Instruments or PSI (subsidies to the private sector) within ODA.</span></p><p>In this blog post we underline some of the insights in the letter. In a second post, to be published shortly, we will look at the wider context of the PSI debate.</p><p></p><h3>Alarm bells ringing at the highest levels</h3><p></p><p><span>PSIs are subsidies that come from donor countries to private sector actors through loans, equity investments or guarantees. Their inclusion in ODA has far-reaching implications for the quantity and quality of aid that reaches some of the poorest people on the planet.</span></p><p>The open letter from Atwood, Manning and Riegler coincided with an OECD announcement of a set of <a href="http://www.oecd.org/dac/Private-Sector-Instruments.htm" rel="nofollow">provisional reporting arrangements</a> for PSI following four long years of debate (more on these in our next post).</p><p><strong>And the letter’s verdict</strong> on the current state of play was an unequivocal critique:</p><p><em>The process of ‘modernising’ Official Development Assistance (ODA) “now appears to be dominated by politically-motivated discussions guided by Finance Ministries” and is “placing the clarity, integrity and credibility of ODA statistics at risk.”</em></p><p><em>There is a ‘’danger that the excessively generous new rules [on reporting ODA investments in the private sector] will encourage a stampede of donors towards “cost-free” ODA through PSI operations.”</em></p><p>To anyone who has been following civil society advocacy on PSI, this may not sound like anything new. A broad coalition of advocates from the global south and global north has been making these arguments for years (e.g. <a href="https://www.oxfam.org/sites/www.oxfam.org/files/file_attachments/oxfam-dac-hlm-feb-2016.pdf" rel="nofollow">here</a>, <a href="https://eurodad.org/files/pdf/1546531-oecd-dac-hlm.pdf" rel="nofollow">here</a>, <a href="https://www.oxfam.org/en/research/oxfams-recommendations-oecd-dac-reform-aid-private-sector-instruments" rel="nofollow">here</a>, <a href="https://eurodad.org/files/pdf/58381f22d9034.pdf" rel="nofollow">here</a>, <a href="https://eurodad.org/files/pdf/1546716-cso-recommendations-on-psi-reform.pdf" rel="nofollow">here</a>, <a href="https://drive.google.com/file/d/0B4hU_Yivka3-OXRQMC02TTFFcHc/view" rel="nofollow">here</a>, <a href="https://eurodad.org/files/pdf/59f2f0d2da8de.pdf" rel="nofollow">here </a>&nbsp;and <a href="https://eurodad.org/files/pdf/5be410c169506.pdf" rel="nofollow">here</a>...).</p><p>But to hear the same arguments expressed so explicitly by such senior, technically renowned insiders is an unprecedented development – and one which signals just how gravely the current situation endangers the credibility and impact of ODA.</p><p><img alt="OECD Conference Center main entrance. Paris, France. Photo: OECD/Michael Dean" title="OECD Conference Center main entrance. Paris, France. Photo: OECD/Michael Dean" height="400" width="600" class="media-element file-default" data-delta="2" typeof="foaf:Image" src="http://l.blogs.oxfam/sites/default/files/oecd-entrance.jpg" /></p><p><em>OECD Conference Center main entrance. Paris, France. Credit: OECD/Michael Dean</em></p><p></p><h3>Eroding ODA’s very nature: blurring the boundary between aid and commercial transactions.</h3><p></p><p><span>One of the most controversial areas of the&nbsp;</span><span>Private Sector Instruments</span><span> debate (and one that the provisional reporting arrangements leave unresolved) is the proposal that PSIs do not need to meet a basic criterion for ODA: concessionality.</span></p><p><strong>Concessionality</strong> – the principle that Official Develoment Assistance should be offered on terms that involve a cost to the donor, not at market rates – has been fundamental to the ODA concept since its origins in the late 1960s. This was the result of long and hard reflection – the culmination of public pressure, explicit requests from governments in the global south, and a realisation in the donor community that ‘more concessional aid was ultimately about aid effectiveness,’ taking into account the economic conditions and debt risks in many recipient countries.</p><p><strong>In short, concessionality can make the difference</strong> between getting essential aid to poor communities, or saddling their countries with unsustainable debts that threaten to impoverish them further.</p><p>Our civil society coalition has always <a href="https://eurodad.org/files/pdf/5be410c169506.pdf" rel="nofollow">opposed any erosion of the concessionality principle</a>, arguing it would go against ODA’s very nature and dilute the boundaries between ODA and commercial transactions. We’ve asked that activities that fail the concessionality test should never be ODA-eligible. Brian Atwood, Richard Manning and Hedwig Riegler agree:</p><p><strong>PSI “fail one of the fundamental tests of ODA</strong>, which is that all its transactions must be “concessional in character”… Discarding concessionality as one of the pillars of the ODA definition contradicts its original purpose, which is precisely to distinguish between concessional and non-concessional flows”</p><p>This leads them to the conclusion that:</p><p>“We are not against recording as ODA what passes the traditional test of ODA (including “concessional in character”), but the financial flows generated by private sector instruments themselves should be recorded in the OOF (other official flows) category.”</p><p></p><h3>2019: a make-or-break year for the credibility of DAC statistics</h3><p></p><p><span>As pointed out by Atwood, Manning and Riegler, dropping the concessionality criterion would:</span></p><p><em>“… undermine the basic architecture of … DAC statistics”</em></p><p>This in turn could have much wider ramifications for the credibility of DAC statistics as a whole:</p><p><em>“If the present excessive political influence on decision-making is not curbed, even the basic role of the … DAC in measurement may well be questioned”</em></p><p><strong>Such a prediction makes grim reading</strong> as we put the holiday season behind us and get down to the business of 2019.</p><p>But, as our next post will set out, the current impasse offers opportunities as well as challenges, if DAC members are bold enough to seize them. Stay tuned!</p><p><em>The entry posted on 10 January 2019, by Polly Meeks (Senior Policy and Advocacy Officer at Eurodad, <a href="twitter.com/polly_meeks" rel="nofollow">@polly_meeks</a>), Julie Seghers (OECD Policy and Advocacy Advisor at Oxfam, <a href="twitter.com/JulieSeghers" rel="nofollow">@JulieSeghers</a>) and Jiten Yumnam (Secretary General of the Centre for Research and Advocacy, Manipur). Also published simultaneously by <a href="https://eurodad.org/private-sector-instruments" rel="nofollow">Eurodad</a>.</em></p><p><em>Photo: Oxfam staff deliver desperately needed food to thousands of people caught up in the Ebola outbreak in Equateur province, Democratic Republic of Congo, June 2018. Credit: Alain Nking/Oxfam</em></p><p></p></div><div class="field field-name-title"><h2>Why 2019 is a Make-or-Break Year for International Aid</h2></div> Thu, 10 Jan 2019 14:38:28 +0000 Guest Blogger 81826 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/81826#comments Can official development assistance be reformed to help the poorest countries? http://l.blogs.oxfam/es/node/81022 <div class="field field-name-body"><p><strong>The rules defining official development assistance, a key poverty reduction tool, are currently being revised by the OECD. But if governments and citizens from the South are not consulted more, this reform is likely to be in their detriment.</strong></p><p>The Organisation for Economic Co-operation and Development (OECD) is <a href="http://www.oecd.org/fr/cad/financementpourledeveloppementdurable/modernisation-dac-statistical-system.htm" rel="nofollow">currently revising</a> the rules defining what can be counted as official development assistance (ODA), which is a key poverty reduction tool. If this reform is not combined with the required criteria and safeguards – established in consultation with governments and citizens in the South – it is likely to be to the detriment of the poorest.</p><h3>A crucial reform devised behind closed doors</h3><p>For over two years now, representatives from donor countries have been busy with a very full agenda, under the leadership of the OECD’s Development Assistance Committee (DAC) in Paris.</p><p>Their objective is to revise the rules on what can – or cannot – be counted as official development assistance. The two priorities for 2017 are to define to what extent ODA can 1) promote private sector development in developing countries, and 2) finance the reception of refugees in rich countries. While this may appear to be technical work, it does have fundamental policy implications for the future of ODA. Yet until now, discussions have been proceeding behind closed doors in Paris, without any proper consultation with the first to feel the impact, i.e. developing countries and civil society. The importance of a transparent and inclusive reform process had, however, been set out in the <a href="http://www.un.org/ga/search/view_doc.asp?symbol=A/CONF.227/L.1" rel="nofollow">Financing for Development Agreement</a> (point 55) endorsed in Addis Ababa in 2015.</p><p><strong><img alt="A meeting at the OECD Conference Center in Paris. Credit: OECD/Andrew Wheeler" title="A meeting at the OECD Conference Center in Paris. Credit: OECD/Andrew Wheeler" height="667" width="1000" class="media-element file-default" typeof="foaf:Image" src="http://l.blogs.oxfam/sites/default/files/oecd-img_2447.jpg" /></strong></p><h3>Promoting aid to support the private sector: what impact on the fight against poverty?</h3><p><strong>The first area of the reform aims</strong> to bring about a more extensive eligibility and use of ODA in the form of loans, investments or guarantees for private actors[1]. This type of financing is often channeled through development finance institutions – PROPARCO in the case of France. The stated objective of this reform is to promote private sector development in poor countries, resulting in more growth and job creation.</p><p><strong>There is no doubt that the private sector plays a crucial role</strong> in the development process. The growth generated by private actors has contributed to an unprecedented reduction in poverty around the world in recent decades. Consequently, it makes real sense for public authorities to promote inclusive and sustainable growth that is broadly beneficial and preserves the planet. However, given the often mixed results of partnerships between public and private actors, which are one of the forms of private sector mobilization for development, Oxfam has doubts as to the relevance and legitimacy of the use of limited ODA funds to support projects conducted by the private sector. The use of a public-private partnership for the construction and management of the largest hospital in Lesotho, supported by the IFC – the World Bank’s private investment arm – is a <a href="https://www.theguardian.com/world/2014/apr/07/lesotho-health-budget-private-consortium-hospital" rel="nofollow">telling example of the dangers of this model</a>, and of the negative impacts it can have on inequalities.</p><p><strong>An <a href="https://www.oxfam.org/sites/www.oxfam.org/files/bp-private-finance-blending-for-development-130217-en.pdf" rel="nofollow">Oxfam and Eurodad study</a> shows that there is limited evidence</strong> on the impact that partnerships with the private sector have on development and poverty reduction. Furthermore, the study shows that these partnerships often fail to align with the fundamental principles of aid effectiveness : the ownership by partner countries is limited, and transparency and accountability are lacking. It is certainly more complicated to apply these standards in the case of financial arrangements involving private partners. It is precisely for this reason that donors need to make greater efforts to ensure that all public funds labelled “ODA” respect the spirit of these principles, otherwise we fear that there will be a decline in the quality of aid.</p><p><strong>Another area of concern is that it is sometimes more difficult to prevent environmental and social risks</strong> in the context of projects involving private intermediaries, as shown by a recent study on projects supported by the World Bank, which transit through commercial banks and private capital funds in Southeast Asia. In addition, <a href="http://www.eurodad.org/files/pdf/1546237-a-private-affair-shining-a-light-on-the-shadowy-institutions-giving-public-support-to-private-companies-and-taking-over-the-development-agenda.pdf" rel="nofollow">almost half </a>of the beneficiaries of the funds disbursed by development finance institutions are subsidiaries of companies based in OECD countries. Consequently, an increase in the aid transiting through these entities leads to the risk of large groups in developed countries benefiting more than private operators – especially SMEs – in developing countries.</p><p><strong>Finally, this type of project tends to focus on middle-income countries</strong> rather than on least developed countries, where it is more difficult to achieve a return on investment. They also tend to focus on the energy, industry and banking sectors. In the long term, encouraging the use of aid for this type of project could redefine the scope of ODA, and result in less financing for public programs in social sectors, such as health and education. In a context where official development assistance volumes are generally stagnant (or even in decline in certain countries), there is a need to question the way in which this reform can influence donor practices, in the more or less distant future, and thereby shape a certain way of defining aid over the long term.</p><p><strong>Civil society organizations, including Oxfam</strong>, have developed a set of detailed recommendations in order to ensure that the ongoing reform is combined with demanding criteria and safeguards that will minimize these risks. The aim is to ensure that the poorest populations gain the most from these new rules. It is also about protecting the credibility of official development assistance as a poverty reduction tool.</p><p><img alt="People from Somalia, Sudan and Morocco and elsewhere arriving at the military port of Lampedusa, Sicily. Credit: Italian Coast Guard, Nov 2015" title="People from Somalia, Sudan and Morocco and elsewhere arriving at the military port of Lampedusa, Sicily. Credit: Italian Coast Guard, Nov 2015" height="680" width="1240" class="media-element file-default" typeof="foaf:Image" src="http://l.blogs.oxfam/sites/default/files/_mg_2207-italian-coast-guard-migrants-1240x680.jpg" /></p><h3>Using ODA to host refugees: robbing Peter to pay Paul?</h3><p><strong>The revision of rules on the use of ODA for expenditures related to hosting refugees in rich countries poses another major challenge.</strong> The eligibility of this type of expenditure has been authorized by the OECD since 1988, but had remained somewhat marginal until recently. However, between 2010 and 2016, this expenditure sharply grew from USD 3.4 billion to USD 15.4 billion, reaching almost 11 % of the total ODA budget. In 2016, a significant proportion of the budget was devoted to it in a number of European countries : 38 % in Austria, 34 % in Italy, and 25 % in Germany.</p><p>The situation in France is for the time being a bit different, as these costs (which accounted for 4.5 % of the aid budget in 2016) are borne by the budget of the Ministry of the Interior, then added to ODA expenditure. The figures give us some food for thought : in 2015, while European DAC members devoted USD 9.7bn of official development assistance to receive 1.2 million asylum seekers in their own territories, they only spent USD 3.2bn for aid in Syria, Afghanistan, Somalia, South Sudan and Sudan – the 5 main countries where asylum seekers come from.</p><p><strong>This practice is <a href="https://www.oxfam.org/en/pressroom/reactions/rich-countries-misleading-public-about-overseas-aid-spending" rel="nofollow">denounced by Oxfam</a>,</strong> as well as by a number of other civil society organizations, and has recently been questioned by the <a href="https://www.project-syndicate.org/commentary/poor-countries-pay-twice-for-refugees-by-jorge-moreira-da-silva-2017-02?referrer=/mFHsTHOvw9" rel="nofollow">OECD Secretariat</a>. It is obviously the responsibility of developed countries to receive refugees and mobilize the financing required to meet their needs and respect their rights. But in the view of civil society, this financing – whether additional or allocated from existing development assistance budgets and therefore to the detriment of projects in poor countries – should not be credited as ODA, as it does not support developing countries.</p><p>This expenditure is made in the territories of Western countries, and must consequently be considered as coming under their national policies and budgets.</p><p><strong>The reform could have provided the opportunity</strong> to end, once and for all, this rule, which allows rich countries to affix the “ODA” label on money which does not contribute to the development of poor countries. Unfortunately, this is not on the agenda of the DAC, which has only decided to “clarify” the rules in order to limit the room for interpretation and harmonize reporting practices.</p><p>While we deplore this missed opportunity, we do see it as a <a href="http://www.oecd.org/dac/CSO%20inputs%20on%20clarification%20of%20rules%20on%20ODA%20to%20in-donor%20refugee%20costs.pdf" rel="nofollow">chance to tighten the rules</a>. This includes clarifying the non-eligibility of certain expenditure : administrative, police, security, control, repatriation costs… Stricter reporting could mark the first step towards a total exclusion in the long term of this expenditure which, in our opinion, artificially inflates ODA figures.</p><p>With this reform, the integrity of <a href="https://www.oxfam.org/en/multimedia/video/2010-does-aid-work" rel="nofollow">official development assistance as the main tool to reduce poverty and inequalities in the South</a> is at stake. Aid plays a vital role in least developed countries, where it accounts for two-thirds of external financing. If it is well managed, it facilitates access for the poorest populations to essential services, such as health and education, it contributes to reducing inequalities, and strengthens the capacities of States to meet the needs of their citizens.</p><p>[1] Indeed, <a href="https://www.oecd.org/dac/DAC-HLM-Communique-2016.pdf" rel="nofollow">in its communiqué of February 2016</a>, the OECD DAC stated: “We recognize the importance of strengthening private sector engagement in development and wish to encourage the use of ODA to mobilize additional private sector resources for development.”</p><p><em>This entry posted by Julie Seghers (<a href="twitter.com/JulieSeghers" rel="nofollow">@JulieSeghers</a>), Responsible for Oxfam’s advocacy towards the OECD, on 19 April 2017. Originally published by <a href="https://goo.gl/fJpBQ3" rel="nofollow">Ideas for Development</a>, a blog coordinated by the French Development Agency.”</em></p><p><em>Photos:<br></em></p><ul><li><em>Martha Nyandit waits for an Oxfam/WFP food delivery, Mingkaman camp, South Sudan. Credit: Pablo Tosco/Oxfam, April 2014</em></li><li><em>A meeting at the OECD Conference Center in Paris. Credit: OECD/Andrew Wheeler</em></li><li><em>People from Somalia, Sudan and Morocco and elsewhere arriving at the military port of Lampedusa, Sicily. Credit: Italian Coast Guard, Nov 2015</em></li></ul><p></p><p></p><p></p></div><div class="field field-name-title"><h2>Can official development assistance be reformed to help the poorest countries?</h2></div> Fri, 21 Apr 2017 14:27:40 +0000 Guest Blogger 81022 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/81022#comments Paddling Against the Tide http://l.blogs.oxfam/es/node/39883 <div class="field field-name-body"><h3>How the changes in the OECD’s definition of aid continue to undermine global efforts against poverty. A statement by African civil society.</h3> <p>Not even half a year ago, world leaders adopted the <strong><a href="https://www.oxfam.org/en/pressroom/pressreleases/2015-09-24/global-goals-poverty-inequality-and-climate-change-challenge" rel="nofollow">Agenda 2030</a></strong>, the latest global agreement towards transforming our world for the betterment of all humankind. With its bold pledge to leave no one behind, and a new set of urgent goals and targets which came into effect at the beginning of 2016, the Agenda represents an ambitious and universal programme to bring the world together for the purpose of addressing pressing and enduring global social, economic and environmental challenges in an integrated way.</p> <p>Yet last week, the OECD’s Development Assistance Committee (DAC) – the body which oversees the OECD’s aid policy and spending – met in Paris to review progress in its “ODA modernization process” and consider the role of development cooperation in the refugee crisis. This meeting caused <strong><a href="https://www.oxfam.org/en/pressroom/reactions/rich-country-governments-put-national-interests-ahead-worlds-poorest" rel="nofollow">big concerns</a></strong> that new agreements would be at cross-purposes with the collective effort, and the role and integrity of ODA as espoused in the post 2015 development agenda are at severe risk.</p> <h3>Too many issues still not resolved</h3> <p>As had been feared, the outcomes were largely disappointing, knocking back the credibility of aid and severely undercutting the potential that ODA holds towards realisation of a truly transformed world by the target date of 2030.</p> <p>As members of African civil society, we are fully conscious that despite the hope held by the Agenda 2030, key global talks held in 2015 left several issues unresolved: the failure by countries of the global north to meet their climate financing responsibilities, the north-south divide on an effective international tax system, and the need to secure adequate levels, as well as preserve the integrity, of aid in the new global development agenda.</p> <h3>Aid for Sub-Saharan Africa is decreasing</h3> <p>Despite a global upward trend in ODA, figures for 2014 show that aid to Sub-Saharan Africa fell for the second consecutive year - back to levels they were a decade ago. This is happening against a background of a long history of developed countries’ failure to meet the UN target for development aid of 0.7% of GNI, recouping on odious debt and decades of turning a blind eye to the scandal of illicit financial flows which continue to bleed Africa of billions of dollars in much needed development finance.</p> <p>It would have been the DAC’s obligation to make conscious efforts to consolidate the gains made in the series of meetings in 2015 rather than seeking to widen existing fault lines and detracting from the collective vision, less than two months into the life of the Agenda 2030.</p> <h3>Subsidies for the private sector instead of funds for essential public services</h3> <p>Instead, against widespread pressure from civil society and citizens of both the global North and South, the DAC failed to preserve the integrity of ODA, agreeing to expand what can be reported as ODA to include costs whose primary purpose is not directly linked to ending poverty. Agreements reached have opened the door for greater donor abuse of ODA by allowing the spiriting away of aid from deserving public programmes towards subsidising the private sector and supporting ambiguous security-related uses.</p> <p>The private sector is one of the biggest beneficiaries of the DAC decisions last week. Despite the risks of deploying scarce public finance to prop up the private sector, the agreements open the way for greater use of aid in subsidies to private companies. While the moves in this direction are in part supposed to “ensure efficient use of scarce public funds and targeting (of) projects with high expected social returns, without creating market distortions”, it is worth noting that, thus far, the deployment of public funds in aid of private sector-led development projects in Africa has had mixed results.</p> <p>The committee’s agreements in this area are littered with loopholes and a series of critical, but yet to be defined, provisions. There is, e.g. the requirement for any aid funds used to support the private sector to be additional to what the private financial sector would have provided anyway. However, it still needs to be defined how to measure this 'additionality'. Also remaining unanswered is how to account for ODA when the public donor money is ‘blended’ with private money or used to subsidise a loan. In addition, donors will be allowed to count public guarantees – the money public entities agree to pay private investors in the event of a failed investment – as ODA.</p> <h3>Rules widely open for interpretation</h3> <p>While a wholesale capitulation may have been averted in relation to greater spending on military and security costs with the retaining of broad language that excludes the financing of military equipment or services from ODA reporting, we remain on a steep and dangerous course. New rules on eligibility of spending ostensibly to prevent violent extremism are problematic. Although couched in the language that such activities would be led by partner countries and be of developmental import, the rules and the purpose for which such monies can be spent is widely open to interpretation, and therefore opens the door for donors to manipulate aid for narrow geopolitical interests at the expense of global development and poverty reduction.</p> <p>The meeting chose to kick the can down the road on the urgent issue of reigning in the massive amounts of ODA that are being diverted to cover in-donor country refugee costs. The DAC has agreed to set up a process to clarify reporting rules regarding the use of development aid for in-donor refugee costs, and promises that this will be done in a clear, transparent and inclusive manner. We look forward to these consultations and the provision of space for the effective participation of civil society organizations in this future work.</p> <h3>Civil society organisations in Africa are already facing slashed budgets from donors</h3> <p>As the DAC dithers on this issue, it is worth noting that many countries have stepped up the diversion of their aid budgets to cover the costs of refugee reception in the current crisis, primarily in the EU. Impacts are already being felt. Civil society organisations in Africa are already facing slashed budgets from donors, and there is growing uncertainty on the sustainability of current and future development programmes. Estimations from the OECD seem to confirm our fears, as around $10 billion of ODA are expected to be spent on in-donor country refugee costs in 2016.</p> <p>In this regard we call for quick and decisive action, and reiterate longstanding calls that in-donor country refugee costs should not be reportable as ODA. These expenditures serve to support the economies of donor countries and have no tangible benefits or linkages to the objective of improving the welfare of poor people in their own countries.</p> <h3>Aid can work – and it is needed!</h3> <p>It is worth reminding the OECD, if needed, that aid is still larger than any other external resource flow in 43 countries - most in Sub-Saharan Africa. ODA will therefore continue to be vital for development in most African countries in the short- to medium-term, particularly when it is targeted and administered well, helping more people to access healthcare, education and other essential services, and tackle widening inequality, where governments lack the capacity to extend public services to all.</p> <p>Invested well, <strong><a href="https://www.oxfam.org/en/multimedia/video/2010-does-aid-work" rel="nofollow">ODA provides people in developing countries with life choices</a></strong> and opportunities that help reduce some of the push factors behind the current refugee crisis. It is therefore a paradox of momentous proportions that funds that could be put in service of poverty reduction, building of capacity for developing countries to mobilise their own resources for development, entrench democratic governance, support the development of local economies and provision of decent work, should be diverted to meeting the needs of citizens of these countries only after they have become refugees in rich countries.</p> <p>Lastly, we believe that developing countries and civil society organisations – being the ones primarily impacted by how ODA is used – should have a say on what counts or doesn't count as ODA, on further rules-setting, and on operations of the DAC in general. The DAC making such critical decisions behind closed doors is contrary to principles of transparency and accountability. We therefore call on the DAC to move speedily in exploring ways of opening up its work in the future.</p> <p><strong>Co-signatures:</strong></p> <ul><li>1. <strong>Fanwell Kenala Bokosi</strong>, PhD, Executive Director, African Forum and Network on Debt and Development (AFRODAD)</li> <li>2. <strong>Akhator ODIGIE</strong>, Coordinator Human and Trade Union Rights, African Regional Organisation of the International Trade Union Confederation</li> <li>3. <strong>Edward Chileka-Banda</strong>, Executive Director, Eye for Development (EFD ), Lilongwe, Malawi</li> <li>4. <strong>Rola Badran</strong>, Programs Officer, Arab Institute for Human Rights (AIHR), Tunis, Tunisia</li> <li>5.<strong> Osai Ojigho</strong>, Coordinator, State of the Union Coalition (SOTU)</li> <li>6. <strong>Dinah Musindarwezo</strong>, Executive Director, African Women's Development and Communications Network (FEMNET)</li> <li>7. <strong>Achieng Akena</strong>,, Executive Director, Centre for Citizens' Participation on the African Union (CCPAU)</li> <li>8. <strong>Hannah Forster</strong>, Executive Director, African Centre for Democracy and Human Rights Studies (ACDHRS)</li> <li>9. <strong>Martin Tsounkeu</strong>, General Representative, Africa Development Interchange Network (ADIN), Chair of the Commonwealth Civil Society Advisory Committee (CSAC), CPDE Focal Point, Cameroon (Development Effectiveness), Coordinator, Global Social Economy Group (GSEG)-Cameroon</li> <li>10. <strong>James Njoroge Gitau</strong>, Chairman, Kariobangi South Welfare &amp; Slums Housing Association (KASWESHA)</li> <li>11. <strong>Corlett Letlojane</strong>, Executive Director, Human Rights Institute of South Africa</li> <li>12. <strong>Kenneth Nana Amoateng</strong>, Chief Executive Officer, Abibiman Foundation</li> <li>13. <strong>Yves Niyiragira</strong>, Executive Director, Fahamu</li> <li>14. <strong>Vitalice Meja</strong>, Coordinator RoA Africa Secretariat Reality of Aid Africa Network (ROA Africa)</li> </ul><h3>What you can do now</h3> <p><a href="https://act.oxfam.org/international/let-aid-do-it-s-job" rel="nofollow"><strong>Tell EU Leaders: Let aid do its job!</strong></a></p> <p><em>This entry was posted on 29 February 2016.</em> </p></div><div class="field field-name-title"><h2>Paddling Against the Tide</h2></div> Mon, 29 Feb 2016 17:59:20 +0000 Guest Blogger 39883 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/39883#comments Oxfam calls for a second generation of corporate tax reforms http://l.blogs.oxfam/es/node/27852 <div class="field field-name-body"><p>Leaders from across the developed world have been talking tough about corporate tax dodging since the financial crisis and a spate of high profile tax scandals pushed the issue onto the front pages. In a reassuring move, the G20 stepped up and initiated the Base Erosion Profit Shifting (<a href="http://www.oecd.org/ctp/beps.htm">BEPS</a>) project, led by the Organization for Economic Cooperation and Development (<a href="http://www.oecd.org/">OECD</a>). Sadly, the BEPS action plan endorsed by G20 Finance Ministers today in <a href="https://www.2015lima.gob.pe/en/">Lima</a>, looks set only to apply a sticking plaster to a gaping wound.</p> <p>On the positive side, the BEPS package of measures could signify a start on the path to creating a coherent and fairer international corporate tax system. They do strengthen some existing rules and provide tax authorities with better tools to identify corporate tax cheats; if they have the capacity to use them. More disappointingly the package of measures patches up the existing rules, making them more complex and in many cases contradictory.</p> <p><strong>Nonetheless, BEPS was flawed from the outset.</strong> Its scope was too parochial, largely representing – and serving - the interests of the world’s richest economies. It is no surprise that G20 and OECD countries craft tax reforms to achieve national objectives – governments are wired to negotiate to safeguard their economic interests. The stakes are high when negotiations are to settle how to share valuable corporate tax revenues; while at the same time protecting profit margins for influential multinational companies.</p> <p>But the international corporate tax system has global coverage and determines the allocation of tax corporate tax revenues to all countries. Yet the majority of developing countries – representing two thirds of the world’s governments - had no formal role in the negotiating process. As a result the OECD’s agenda fails to address many issues of critical importance to developing countries. BEPS will not stop the use of tax havens, which cost developing countries an estimated US$100 billion in tax revenues each year. And will not force companies to pay tax where they do business – tackling this issue would enable a country like Honduras to quadruple its corporate tax base.</p> <p><strong>Revenue loss from businesses </strong>dodging their tax payments harms poorer economies most, as corporate tax revenues comprise a higher proportion of their national income. Yet their tax administrations have limited capacity to track down and reclaim the taxes owed to them, and – significantly - the skewed international tax rules require corporates to pay the bulk of their taxes in rich countries.  On average, it is estimated that Latin American countries are losing half of their potential corporate tax revenues because of corporate tax avoidance.</p> <p>The package of reforms will not prevent another <a href="https://en.wikipedia.org/wiki/Luxembourg_Leaks">Lux Leaks</a> type scandal. A number of harmful tax regimes that contributed to the Lux leaks and other well-known scandals are allowed to remain in place until 2021.  This includes the provision of overly generous and unproductive tax incentives such as the innovation box - a form of unfair tax relief for companies basing intangible assets (patents, copyrights, trademarks etc) in a low-tax country. These types of schemes create a race to the bottom between nations that compete for business by offering low tax incentives, which are often nonetheless unproductive. Tax incentives cost the Sierra Leone government 59 percent of its entire budget in 2012.</p> <p><strong>Oxfam is calling for a second generation of tax reform</strong> which includes all countries on an equal footing and all relevant international organizations, such as UN agencies, IMF, and World Bank, to urgently address the key problems that have not been tackled or adequately responded to by the G20 and its members through the OECD process.  Only then will we have an international tax system which works in the interests of the majority – not the few.</p> <iframe width="560" height="315" src="https://www.youtube.com/embed/kY0NKvSBFLY?rel=0" frameborder="0" allowfullscreen=""></iframe><h3>What you can do</h3> <p><a href="https://act.oxfam.org/international/even"><strong>Call on your government to make tax fair</strong></a></p> </div><div class="field field-name-title"><h2>Oxfam calls for a second generation of corporate tax reforms</h2></div> Thu, 08 Oct 2015 14:48:09 +0000 Claire Godfrey 27852 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/27852#comments Unfair international taxation undermines economic, political and social development progress http://l.blogs.oxfam/es/node/10661 <div class="field field-name-body"><p><strong><a href="http://www.oxfam.org/en/policy/business-among-friends-why-corporate-tax-dodgers-are-not-yet-losing-sleep-over-global-tax-ref" target="_blank" rel="nofollow">Oxfam’s report</a></strong> showing how developing countries have been marginalised in the process of reforming the rules for taxing multinational enterprises has been well received – unsurprisingly, perhaps, since the evidence of political marginalisation and of lost revenues is fairly clear.</p> <p>Yet, here we are accused of such a lack of understanding that our suggestions “would actually reduce the wages of the workers in those poor countries.”</p> <p>Tim Worstall of the Adam Smith Institute argues in his blog, <strong><a href="http://www.forbes.com/sites/timworstall/2014/05/04/apparently-oxfam-is-entirely-ignorant-of-the-economics-of-taxation/" target="_blank" rel="nofollow">‘Apparently Oxfam Is Entirely Ignorant Of The Economics Of Taxation’</a></strong>, the following:</p> <ol><li>Taxing corporate income (returns to capital) will discourage investment, so the optimal corporate tax rate is zero; </li> <li>Average wages in a country are determined by average productivity, which in turn depends on the level of capital; and therefore </li> <li>If the rules are changed to allow developing countries to tax corporate income more effectively, the effect will be to discourage investment and depress (average) wages.</li> </ol><p>On this basis, Mr. Worstall concludes that: “Oxfam is, quite literally, arguing that the wages of the poorest in the world must be reduced.” <strong>It should be clear that we are neither literally nor indeed metaphorically making such an argument.</strong> Here’s why. First, Mr. Worstall’s view – on its own, somewhat narrow economic terms – is unlikely to be realistic because it rests on a highly stylised model. The assumptions necessary are heroic, not least in relation to costless adjustment processes. As such, using this as the basis for understanding the likely effects of changes in corporate taxation globally may not give a terribly accurate picture. As leading conservative economist <strong><a href="http://scholar.harvard.edu/mankiw/home" target="_blank" rel="nofollow">Greg Mankiw</a></strong> has written, “The theory of optimal taxation has yet to deliver clear guidance on a general system of history-dependent, coordinated labor and capital taxation for a realistically-calibrated economy.” Major issues include the difficulties of constructing effective alternatives that generate sufficient revenue and are not deeply regressive. Elsewhere, Mr Worstall has recognised at least some of these complexities of the real world approach to corporate tax – for example, here, where he considers a disagreement between Mankiw and Paul Krugman.  In addition, many studies including those from the IMF and McKinsey’s have shown that corporate tax rates have little bearing on investment location in developing countries.</p> <p>Mr. Worstall’s second point, that productivity depends on capital, is also unrealistic. Tax revenues are vital to the kind of social spending and public infrastructure investments that will raise productivity over time, making countries more attractive for investors – and given relative scarcity, simple economics would suggest higher returns to public spending in lower-income, lower-revenue states (all else being equal). Neither of the foundational statements to support Mr. Worstall’s conclusion can therefore be supported. The more important errors in Mr. Worstall’s criticism, however, are political. The approach taken fails to recognise all of the central features of the current context:</p> <ul><li>that nearly all countries still tax corporate income (despite the long-standing theoretical result), suggesting that there may be good reasons to do so; </li> <li>that the G8 and G20 have instigated a major action plan to combat the failure of the OECD’s rules to align profit with actual economic activity, suggesting that they want to tax corporate income more effectively; and </li> <li>that lower-income countries, in general, suffer more this misalignment (that is, their share of total taxable profits declared is disproportionately small compared to their share of economic activity).</li> </ul><p>Mr. Worstall’s criticism is to argue that because simple economic theory suggests corporate taxation in general may distort, we should not be concerned with its effectiveness in developing countries. If the power to operate such taxation effectively has been made a priority for the richest countries, should we not be concerned if developing countries are marginalised from that process, or if the changes made do not reflect their challenges? If developing countries in fact suffer worse under-reporting of taxable profit, does it not make a case for rule changes that reflect this? There may one day come a time when the context allows countries to eliminate corporate taxation (in favour, presumably, of much more effective individual income, capital gains and wealth taxation). Until such time, however, <strong>poorer countries and their citizens should not be deprived of the power sought by <a href="http://www.oecd.org/about/membersandpartners/list-oecd-member-countries.htm" target="_blank" rel="nofollow">OECD members</a> to tax effectively the profits of multinational enterprises.</strong> Not only is this clearly unjust, but it is likely to undermine economic, political and social development progress.</p> <p>To paraphrase Mr. Worstall’s rather aggressive headline: Oxfam could only support such a position if we were entirely ignorant of the reality of international taxation. </p> <h3>You may also like</h3> <p><strong>Download the report - <a href="http://oxf.am/p5A" rel="nofollow">Business Among Friends: Why corporate tax dodgers are not yet losing sleep over global tax reform</a></strong></p> <p><strong>Read the post - <a href="http://blogs.oxfam.org/en/blogs/14-05-02-developing-countries-must-be-heart-global-tax-reform">Developing countries must be at the heart of Global Tax Reform </a>by Winnie Wyanyima</strong></p></div><div class="field field-name-title"><h2>Unfair international taxation undermines economic, political and social development progress</h2></div> Thu, 08 May 2014 10:47:38 +0000 Claire Godfrey 10661 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/10661#comments Developing countries must be at the heart of Global Tax Reform http://l.blogs.oxfam/es/node/10681 <div class="field field-name-body"><p>After the world was plunged into a financial crisis, back in 2009, G20 leaders promised to clean up the international tax system, once and for all. The result – five years on – is a plan of action devised for them by the <strong><a href="http://www.oecd.org/" target="_blank" rel="nofollow">Organisation for Economic Co-operation and Development</a></strong> (OECD) to tackle <strong><a href="http://www.oecd-ilibrary.org/taxation/addressing-base-erosion-and-profit-shifting_9789264192744-en" target="_blank" rel="nofollow">Base Erosion and Profit Shifting</a></strong> (BEPS), a series of tactics used by multinational companies to make profits ‘disappear’ or move to another country, to pay less or even avoid paying corporate taxation. </p> <p>This action plan is obviously a much needed and welcome step. The current dysfunctional international tax rules are allowing scores of multinational companies to pay minimal tax bills in the countries where economic production takes place, compared to the profits they are earning and often hiding offshore. They also fuel a system of unhealthy competition abused by companies, where developing countries enter into a race to the bottom to offer the most competitive tax rates and unfeasible tax breaks, in the hope of attracting foreign investment to their shores. And they exacerbate inequality, because it’s the least well-off economies who are being hit hardest. </p> <p>It’s estimated that the tax gap, in other words the amount of tax liability not paid by multinationals to developing countries, is about $104 billion a year. One discreet example of corporate tax dodging illustrates the kind of impact this has for the public; Peru’s tax administration audited just a fraction of corporate transactions involving transfer pricing in 2013, and uncovered a sum equivalent to US$ 105 million in unpaid tax - almost enough to fund the whole maternal neonatal public programme. </p> <p>So why, when developing countries are so obviously impacted and when better tax structures could be of such monumental benefit to poorer economies, are these nations not being involved in any plans for tax reform? <strong>The OECD’s negotiations have failed so far to include any developing countries in the process on an equal footing.</strong> There have been attempts to ‘consult’ some of them but on such a serious issue as an international tax reform, more than mere consultation is needed.  </p> <p>Currently the reform led by the OECD leaves four fifths of the planet on the side and is posing a huge risk that any revisions to global tax rules will only reflect the interests of the wealthiest and most powerful nations.</p> <p>Oxfam believes that any global talks to reform tax rules must include all countries, including the poorest. Policy makers and influencials representing the G20 and other OECD members must use the opportunity of the OECD Forum, taking place in Paris next week, to commit to doing this. </p> <p>If done properly, the G20/OECD BEPS project presents a unique opportunity to overhaul international corporate tax rules to the benefit of all economies, an opportunity too rare and important to be squandered. </p> <p>But beyond that, <strong>we need to raise our ambition on tax reform.</strong> Global governments should start seriously talking about the creation of a World Tax Authority with the mission to ensure that tax systems will deliver for the public interests in all countries.</p> <h3>You may also like</h3> <p><strong>Read the report: <a href="http://www.oxfam.org/en/policy/business-among-friends" rel="nofollow">Business Among Friends. Why corporate tax dodgers are not yet losing sleep over global tax reform</a></strong><a href="http://www.oxfam.org/en/policy/business-among-friends" rel="nofollow"></a></p></div><div class="field field-name-title"><h2>Developing countries must be at the heart of Global Tax Reform</h2></div> Fri, 02 May 2014 00:00:00 +0000 Winnie Byanyima 10681 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/10681#comments G20 must rewrite global rules on corporate tax http://l.blogs.oxfam/es/node/10417 <div class="field field-name-body"><p><strong>While disagreements over Syria are likely to dominate the annual <a href="http://www.g20.org/docs/about/about_G20.html" target="_blank" rel="nofollow">G20 Summit in St Petersburg</a> this week, leaders are at least in agreement about one key issue on the table: the need to rewrite global corporate tax rules.</strong></p> <p>As the OECD acknowledged this year, current laws – some dating back to the 1920s – are simply no longer fit for purpose in a modern globalised world. Created to avoid the “double taxation” of companies working in more than one country, they are now being abused by companies using transfer pricing to avoid paying tax where they do business – sometimes avoiding paying tax in any country.</p> <p>The scandalous result is that the world’s poorest countries are <a href="http://www.oxfam.org/en/pressroom/pressrelease/2013-09-01/tax-evasion-damaging-poor-country-economies" rel="nofollow"><strong>losing $160 billion a year</strong></a> – resources that could be spent on tackling poverty and boosting their economies. In the two days of the G20 summit alone, the money being siphoned out of developing countries by companies would be enough to pay for the entire annual education budgets of Kenya and Tanzania.</p> <p><strong>As the economic crisis continues to bite</strong>, forcing governments and people around the globe to tighten their belts, it’s easy to see why tax dodging by multinational corporations has caused a tidal wave of public outcry. To its credit, the UK government took leadership on the issue at the G8 summit back in June and waved a red flag at tax dodgers, warning them that their days of ripping off rich and poor countries alike were numbered.</p> <p>But while the G8 saw some movement towards improving tax haven transparency and an acknowledgement of the need to ensure poor countries are included, it is the G20 which has all the big players at the table. This is where the main action needs to takes place.</p> <p>In April, G20 finance ministers backed the multilateral <a href="http://www.oecd.org/tax/exchange-of-tax-information/conventiononmutualadministrativeassistanceintaxmatters.htm" target="_blank" rel="nofollow"><strong>Convention on Mutual Administrative Assistance in Tax Matters</strong></a> and China became the final G20 member to sign up to it last week.</p> <p><strong>But for all the goodwill</strong>, pledges and agreements, people in the poorest countries will be left behind in the race for tax reform unless world leaders seriously up their game. We need much more than the warm words in the G8 communiqué to ensure that tax dodging no longer undermines the fight against global poverty.</p> <p><strong>The stakes are high</strong>. Global aid is falling for the first time in 15 years yet, despite recent progress, one in eight of the world’s population goes to bed hungry and many more live in poverty. Leaders in St Petersburg have the chance to send a clear signal that they are no longer willing to tolerate some of the world’s most profitable firms dodging their responsibilities to global society. They must grasp it.</p> <p><em>This is an abridged version. Read the full version published by <strong><a href="http://blogs.ft.com/beyond-brics/2013/09/03/guest-post-g20-must-rewrite-global-rules-on-corporate-tax/" target="_blank" rel="nofollow">Financial Times/Beyond BRICS</a></strong> (3 September 2013).</em></p></div><div class="field field-name-title"><h2>G20 must rewrite global rules on corporate tax</h2></div> Tue, 03 Sep 2013 16:01:24 +0000 Emma Seery 10417 at http://l.blogs.oxfam http://l.blogs.oxfam/es/node/10417#comments