How can a reform of the global tax architecture advance the 2030 Agenda?
As developing nations lose billions to tax havens, international tax reform for fairer taxation is crucial.
As many countries face tight fiscal constraints, the mobilization of additional tax revenue has become a central aspect of the financing for development agenda. However, there remains a large unmet tax potential in developing countries that could generate resources on the scale required for achieving the SDGs.
In 2023, the annual tax losses were calculated at US$480 billion worldwide, and if this trend persists countries are expected to lose $4.8 trillion over the next 10 years due to tax avoidance and evasion. In comparison, countries around the world collectively spent $4.66 trillion on public health in a single year and lower incomes countries’ tax losses ($47 billion) are equivalent to about half their public health budgets.
As the data suggests, addressing tax avoidance through policies, institutions and building technical capabilities to collect tax revenue is indispensable and urgently needed for strengthening the ability of governments to deliver sustainable development.
“A fair and just global economy means a reform of global tax rules that will increase the resources governments can mobilize domestically by ensuring that multinational corporations pay their fair share of taxes.”
Dr. Volker Türk, United Nations High Commissioner for Human Rights, UN Human Rights Office (OHCHR)
“Everyone needs tax to help enable their human rights. Whether it’s education, whether it’s health, whether it’s social protection, it’s crucial for all of us.”
Liz Nelson, Director, Advocacy & Research, Tax Justice Network
While international policy discussions on reforming international tax norms to address digitalization and globalization have been ongoing for more than a decade, they have yet to yield an agreement that sufficiently addresses allocation of taxing rights, tax avoidance and evasion, and that has the full support of all Member States.
In 2022, the Africa Group in the UN General Assembly put forward a resolution to hold intergovernmental discussions on strengthening international tax cooperation. This process ultimately led to the passing of a resolution in November 2023 that mandates Member States to negotiate a United Nations Framework Convention on International Tax Cooperation. Such an intergovernmental body under the auspices of the UN could help with the creation of global standards and legal frameworks on taxation, thereby making global tax governance more effective and inclusive. The reform proposals include establishing a higher global minimum corporate income tax rate, a fairer allocation of taxing rights between countries at the international level, and greater transparency to combat corruption and fraud.
Building on the current momentum, reforms of the global tax architecture that comprehensively address tax evasion, establish fairer global rules and facilitate more transparency and knowledge-sharing will play a crucial role in advancing the 2030 Agenda.
“The initiative to create a process for a UN tax convention and create a platform for a more inclusive process of setting the rules on international tax cooperation is so important.”
Marcella Favretto, Chief of the Sustainable Development Section, Office of the High Commissioner for Human Rights.
“Today we see a situation where one single company has revenues which are more than the GDP of multiple countries combined. And for individual countries now to tax such enormous corporations or even billionaires has become really very difficult. And this requires strengthened multilateralism.”
Abdul Muheet Chowdhary, Senior Program Officer, South Center Tax Initiative (SCTI)
“We want a tax policy that is progressive rather than regressive and that really moves forward and helps us achieve the 2030 Agenda.”
Peggy Hicks, Director, Thematic Engagement, Special Procedures and Right to Development Division, UN Human Rights Office (OHCHR)
“Tax systems should be progressive. They should be coordinated around the world to stop tax avoidance and tax evasion from multinational enterprises.”
Ambassador Francisco Saffie Gatica, Ambassador and Permanent Representative of Chile to the OEC
Sources:
State of Tax Justice (2023), Tax Justice Network
Promotion of inclusive and effective international tax cooperation at the United Nations: Report of the Secretary-General (2023), United Nations General Assembly
Question & Answers ON THE UNITED NATIONS AND INTERNATIONAL TAX COOPERATION (2023), Eurodad
Press release: Governments Approve Proposal for International Tax Cooperation at United Nations (2023), Global Alliance for Tax Justice
2024 Financing for Development Report: Financing for Development at a Crossroads — Chapter III.A: Domestic public resources (2024), Inter-agency Task Force on Financing for Development
