The north against the south of the planet. On the one hand, the bulk of the world’s population (75%): China, India and Brazil and the bloc of developing countries, the Brics. On the other, the great economic powers: the United States, Europe (including Spain), Japan and Australia. The G-7.
An unprecedented split in economic matters took place on Wednesday. Under the initiative of the African states, the General Assembly of the United Nations approved, with 125 votes in favor and 48 against, that the UN take the reins in matters of international taxation. It has given the green light for a framework convention to be launched, in which the field of action will be established to discipline and set the minimum criteria for international taxation. A text that should be voted on in about a year. Prestigious economists who have been calling for more equitable global taxation for years, such as Thomas Piketty, Joseph Stiglitz and Gabriel Zucman, celebrated the news as a major breakthrough.
This is a full-fledged challenge to the OECD (Organization for Economic Cooperation and Development), the multilateral body of the Western economies, which until now – the last two years – had tried, with uneven success, draw up global guidelines for designing a minimum corporate tax and a rate for multinationals. This organization issued a rare (not to say icy) statement, in which it defended the work carried out so far, with a generic willingness to collaborate.
The southern rebellion, so to speak, is motivated by several factors. The first, that these developing countries perceived that the debate process within the OECD was not transparent. They were wary of adopting measures that most of them had not even helped to draft.
Second, that the resistance of the United States to apply some of these regulations (especially the one affecting its powerful technological multinationals, but not only) was making the OECD initiative lose credibility.
And third, perhaps most importantly, the tax plan of the Western economic powers offered no guarantee of the elimination of tax havens or very low tax jurisdictions (Ireland, Luxembourg, the Netherlands, the British Isles, Switzerland , just to mention a few), which meant, in practice, keeping alive the legal instruments that allow tax avoidance (if not evasion).
The battle is just beginning. “The vote shows that there is a geopolitical risk in fiscal matters,” explains Susana Ruiz, Oxfam’s fiscal policy manager. “The refusal of the major Western economies is proof that none of these economies want to lose control over their tax regimes”, he adds.
The platform of economists Tax Justice Network recalled yesterday that, according to its estimates, countries that voted no to the United Nations framework convention are responsible for three quarters of global tax revenue losses, most of them hidden in tax havens.
