Civil Society Organization (CSO) leaders from various countries have expressed support for a United Nations (UN) Convention on inclusive tax cooperation to combat profit shifting and illicit financial flows in extractive industries.
This was resounded in an international conference on tax justice held last Nov. 9 to 11 in Quezon City while the convention on inclusive tax cooperation is being deliberated at the UN.
A comprehensive UN Tax Convention and democratic global tax governance under the UN are the only ways to put an end to profit shifting and illicit financial flows that are rampant in the extractive and other industries, according to the CSO leaders from the Philippines, Indonesia, Zambia, Argentina, Canada, and other parts of the world.
They argued that the Organisation for Economic Cooperation and Development (OECD), which has long dominated the international tax policy arena, is an exclusive "club" of rich countries that is not interested in protecting the rights and interests of developing countries.
Asian Peoples’ Movement on Debt and Development (APMDD) Coordinator Lidy Nacpil expressed that the worsening multiple crises faced by countries all over the world “can only be effectively addressed through massive efforts by governments to guarantee peoples’ rights to public services and to a rapid, just, and equitable shift to renewable energy.”
“This requires equally massive resources mobilized through equitable taxation that takes into account economic and social inequalities worsened by the multiple crises,” she added, citing that “the OECD’s Inclusive Framework on BEPS, which is designed to protect the interests of multinational corporations and rich countries, further weakens Global South countries’ ability to address their people’s needs and secure their rights.”
Meanwhile, leaders of Philippine organizations also slammed the government’s recent decision to sign on to the BEPS Framework.
“The Philippines has committed a major blunder in becoming a member of the OECD’s BEPS Framework,” Freedom from Debt Coalition Secretary-General Rovik Obanil said.
He added that the government “should know that the arrogation of international tax rulemaking by the world’s largest economies through the OECD/G20 Base Erosion and Profit-Shifting (BEPS) framework is fundamentally undemocratic, illegitimate, and biased towards the interests of countries, corporations, and wealthy individuals already benefiting from status quo tax rules.”
Obanil said that this adds another layer to the set of short-sighted tax policy decisions taken by the government since TRAIN and CREATE that have favored elite and corporate interests, shifting the burden of raising revenues to ordinary people, through indirect taxation.
For her part, Oriang Women’s Movement President Flora Santos said that the Philippines should stand behind the UN Tax Convention currently being deliberated in the UN.
“Women suffer the worst effects of deepening inequality in our society. The membership of the Philippines in the OECD’s BEPS framework will only worsen inequalities as we see that the OECD proposals on tax policies are pro-corporations and not pro-people,” she said.
Because of this, Santos stated that she and her organization are “one with tax justice networks for the immediate adoption of a UN Tax Convention and an intergovernmental tax mechanism under UN auspice."
Nacpil, Obanil and Santos were among the CSO leaders gathered at the international conference on “Tax and Extractives: Make MNCs’ Pay Their Share, Rewrite Global Tax Rules” which ended last weekend.
Further, independent experts and resource persons tackled tax system issues in mining and extractive sectors, highlighting a lack of transparency, tax avoidance, profit shifting, and unfair incentives, while emphasizing their negative impacts on communities, environment, and economies.
Conference speakers and participants also expressed that the OECD, backed by the International Monetary Fund (IMF) and G7, is reportedly blocking the UN's efforts to democratize global tax governance by pressuring developing countries to join its Inclusive Framework on Base Erosion and Profit Shifting.
This has been criticized by leaders of the developing countries, independent experts, and CSOs for the past two years as a “Tax Deal of the Rich” that has nothing positive to offer to developing countries.
The international conference was organized by the Tax and Fiscal Justice-Asia (TAFJA), Global Alliance for Tax Justice (GATJ), and the Canadians for Tax Fairness (C4TF) in collaboration with the Asian Peoples’ Movement on Debt and Development (APMDD).
They count among the over 200 CSO leaders who signed an open letter last Nov. 3, declaring support for the UN draft resolution that aims to promote inclusive international tax cooperation towards effectively ending corporate profit shifting and other tax abuses and illicit financial flows.
“Our agenda here is to forge solidarity for tax justice, and discuss solutions to the rampant tax and labor abuses, and other unjust practices in the extractive sector and other industries all over the world,” TAFJA and APMDD Coordination Committee member Jeannie Manipon said.
“Reforming the international tax system under the auspices of the UN, where all countries can negotiate and stand on equal footing, is one critical step towards an international solution,” she added.