In a basement under the UN headquarters in New York, the world’s governments are negotiating an agreement that could strengthen the future course of global tax systems. A deal on this could also dramatically contribute to financing poverty eradication and environmental protection, securing development priorities for the next 15 years.

The talks – meant to lead to agreement on how to fund the sustainable development goals – will culminate in a global summit on financing for development in Ethiopia next month.

A core issue in this heated discussion is whether developing countries have a right to sit at the table when global tax standards are decided.

Aware that they lose more money to international tax dodging than they receive in aid, developing countries have demanded fundamental changes to the way global standards for cross-border taxation and financial transparency are decided.

They want a global body on tax cooperation under the auspices of the UN. Today, global tax standards are decided behind closed doors at the Organisation for Economic Co-operation and Development (OECD) – also known as the “rich countries’ club”.

The result is a set of standards that disadvantage developing countries financially, and a broken global tax system, riddled with loopholes for tax dodgers.

This system also creates a race to the bottom whereby governments clash in “tax wars” – fighting to get multinational corporations to pay taxes in their own country, while at the same time providing loopholes for multinationals to dodge taxes in other countries.

The victims include national companies unable to compete with multinational corporations, and citizens, who face higher prices and poorer public services.

Developing countries want a new tax body to foster global cooperation based on the simple principle that countries should not destroy the tax systems of other countries. This would strengthen the ability of countries to set their own tax rates and decide their own national systems.

European states have different positions, but – in particular because of the UK and France – the EU is rejecting the proposal for a global tax body.

Here are 10 reasons why the EU should change its stance:

A key step towards a coherent global system. The international tax system consists of a complicated web of legally binding bilateral tax treaties, and parallel international systems to regulate cross-border taxation. A global system offers the only way to remove this complexity.

Stronger cooperation between tax administrations. A coherent global system will improve working conditions for tax administrations, enabling more efficient cooperation to ensure multinational corporations pay their taxes.

Less unilateral action. Individual governments have resorted to blacklisting and aggressive national laws to protect their tax base. Under the status quo, we are likely to see more self-protective measures, which complicate the lives of ordinary people and those companies not evading taxes.

An end to the “race to the bottom”. The fear of losing investments is driving governments to introduce tax incentives, loopholes and harmful tax practices.

A better business environment. Diverse, inconsistent national tax systems create heavy administrative burdens, legal uncertainty and high risks for international business.

A level playing field. Governments fear that being a “first mover” on tax transparency will push businesses to register in other jurisdictions. Through truly global negotiations, governments can agree coordinated action and ensure a level playing field.

Government negotiators were greeted by a ‘Global Tax Body’ at UN headquarters in New York last week. The stunt was part of a global week of action for tax justice. Photograph: Oxfam

Stronger implementation. No government feels obliged to implement tax standards that were adopted, without consent, behind closed doors. The UN is the only global institution where all governments participate as equals.

Less double taxation and double-non-taxation. Mismatches between national tax systems explain why some get taxed twice on the same income while others don’t get taxed at all. Only truly global cooperation can end these problems.

More financing for development in the poorest countries. The exclusion of the world’s poorest countries from decisions on global tax standards means that international systems often don’t consider their interests. This means lower tax income and scarcer financing for development.

Fair and consistent global action against tax havens. Many governments try to protect their tax base through national blacklists based on criteria that are often unclear and inconsistently applied. The EU’s controversial new “tax haven blacklist” omits countries like Switzerland and Luxembourg but includes, for example, Liberia – one of the world’s poorest countries and not a major player in the offshore world. Action against tax havens must be fair, consistent and globally coordinated to be effective.

There is also one last bonus reason. Right now, disagreements about the tax body are preventing governments from reaching an agreement on a wider financing for development accord.

This deal, meant to be finalised in Addis Ababa, would be the first step towards the adoption of the sustainable development goals in September and the drafting of a climate treaty in December. Unblocking the stalemate over a global tax body could pave the way for more multilateral breakthroughs.

It’s time for EU countries to call their negotiators in New York and tell them to shift position.

Tove Maria Ryding is policy and advocacy manager at the European Network on Debt and Development (Eurodad). She attended the pre-Addis negotiations in New York last week





