UK Government blocking progress on new global tax body

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ActionAid, Christian Aid, Oxfam and Save the Children made the following joint statement today:

At the third UN Conference on Financing for Development (FfD3) in Addis Ababa this week there is growing concern that rich countries, including the UK, are blocking agreement on one of the most important potential outcomes, the upgrading of the UN tax Committee to an intergovernmental  body in the UN. This would give all countries, including developing countries, an equal say in deciding global tax rules.

The current global tax system as it stands has been widely acknowledged as not fit for purpose and is dominated by the Organization for Economic Cooperation and Development (OECD), which means that the poorest countries are effectively excluded from influence while the system works in favour of rich countries and multinationals seeking to avoid tax.   This matters because progressive taxation is proven to be the most stable and effective source of finance for tackling poverty and corporate taxes are a critically important source of tax.

The FfD process is the only place where the world comes together to discuss the big structural changes that are needed to allow impoverished countries to develop in a sustainable, and equitable, way.  Effective, global, systems for dealing with tax, debt, investment and trade have never been more relevant, and not just for the poorest countries, as the situation in Greece demonstrates all too well.

The UK government has positioned itself as a global leader on many aspects of sustainable development, aid and in global efforts to tackle tax avoidance and evasion. It is therefore disappointing that the UK appears to be one of the few governments blocking progress on the important issue of a tax body. Such progress could begin to re-balance power in the tax system and provide certainty and confidence for tax authorities and businesses.

Failure to tackle this question in Addis will not make these urgent problems of international tax reform go away.  It will simply intensify the challenges ahead for the international community. There is growing recognition that the OECD alone cannot ensure that global rules work for all countries, especially the poorest. Blocking agreement on an obvious solution in Addis simply delays the inevitable while putting other critical processes at risk.

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I wish to thank all three bodies for their work on this vital issue.