Monday, February 19, 2024

The UK has tried to derail UN plans for a fair tax system. So, 22 NGOs have got involved.
Surprise, surprise


 by Steve Topple
19 February 2024
in Analysis

22 UK NGOs have sent a letter to the prime minister calling on the UK government to reconsider its position on the UN Tax Convention.

The letter – sent ahead of the first meeting of the UN committee (which includes all UN member states including the UK) that will draft the terms of reference for the convention from 20-22 February – calls for the UK to support the negotiation of the UN framework convention on international tax cooperation.
UN Tax Convention: sorely needed

In November 2023, UN countries adopted plans to begin working on a global framework for tax rules. As the Tax Justice Network wrote:

The framework convention can eventually move decision-making on global tax rules from the OECD – a small club of rich countries where this has sat for over 60 years – to the UN.

Predictably, prominent global north countries tried to block the UN Tax Convention:

The UK and EU in particular drew criticism in recent weeks from negotiators at the UN for attempting to “kill” the UN process and for negotiating in “bad faith”.2 The success of the resolution despite the resistance from the world’s strongest economies is a rare feat, and demonstrates the overwhelming demand from countries outside the OECD for the meaningful voice on global tax rules which they have historically been denied.

A last-minute attempt by the UK to defang the UN resolution, by removing any mention of a convention from the resolution, was defeated by nearly 2 to 1: 107 countries rejected the resolution; 55 countries supported it.

The need for global tax reform has never been more urgent.
The Global South: being robbed by the global north

As the Global Alliance for Tax Justice noted in 2020:


Of the $427 billion in tax lost each year globally to tax havens, the report shows that $245 billion is directly lost to corporate tax abuse by multinational corporations and $182 billion to private tax evasion. Multinational corporations paid billions less in tax than they should have by shifting $1.38 trillion worth of profit out of the countries where they were generated and into tax havens, where corporate tax rates are extremely low or non-existent. Private tax evaders paid less tax than they should have by storing a total of over $10 trillion in financial assets offshore.

However, the effect on the Global South is the most stark. The Global Alliance for Tax Justice said:

Higher income countries altogether lose over $382 billion every year whereas lower income countries lose $45 billion. However, lower income countries’ tax losses are equivalent to nearly 52 per cent of their combined public health budgets, whereas higher income countries’ tax losses are equivalent to 8 per cent of their combined public health budgets. Similarly, lower income countries lose the equivalent of 5.8 per cent of the total tax revenue they typically collect a year to global tax abuse whereas higher income countries on average lose 2.5 per cent.

That is – countries in the Global South are being robbed of crucial public money by corporations and governments in the global north.
The NHS budget could increase by 20%

So, groups the Tax Justice Network, Tax Justice UK, and Bond (the UK network for over 350 organisations working in international development) have coordinated a letter to the PM. Signatories include Oxfam, CAFOD, Greenpeace, Global Justice Now, The Bretton Woods Project, and many more.

The letter aims to apply pressure on the government and any future UK government to advocate for a fairer global tax system. It must work with the UN Tax Convention and rebuild the trust of lower-income countries.

The letter, ahead of the meeting of the UN, recognises that:


Revenue losses due to the cross-border tax abuse of multinational companies and of wealthy individuals with offshore assets are estimated to amount to US$480 billion each year globally. High-income countries including the UK lose the greatest amounts in absolute terms. Yet, the losses make up a much higher share of current tax revenues for lower-income countries, which on average are estimated to suffer losses equivalent to almost half of their public health budgets (49%). For the UK, recovering these losses would allow an increase in the NHS budget of around 20%.
UN Tax Convention: the UK must start acting responsibly

Romilly Greenhill, CEO of Bond said:


For too long international tax rules have been determined by an exclusive group of high-income countries. By supporting the UN Tax Convention, the current and any future UK government can demonstrate its commitment to a fairer, more transparent and integrated global tax system, rebuild trust with low-income countries and re-establish the UK’s global reputation as a responsible partner.

Alex Cobham, chief executive of Tax Justice Network said:


The UK is one of the countries that lose most revenue because of the failures of the OECD’s international tax rules. That undermines the scope for government to deliver effective public services, including the NHS. And the UK is also deeply responsible for losses suffered by other countries. Supporting an ambitious UN Tax Convention is just basic sense for any UK government that’s not set on damaging the country or its reputation further.

Featured image via YuriArcursPeopleimages – Envato Elements

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