Justicia Fiscal

The system behind the system: Setting adequate principles and objectives for the UN Tax Convention 

Sesiones para discutir los términos de referencia de la #ConvenciónFiscalUUNNSesiones para discutir los términos de referencia de la #ConvenciónFIscalUUNN

Klelia Guerrero García

Gender and Tax Justice Specialist at the Latin American Network for Social and Economic Justice – Latindadd

April 29th is the second day of work within the Ad Hoc Committee to Draft Terms of Reference for a United Nations Framework Convention on International Tax Cooperation (FCITC). More specifically, this session contemplates discussing the elements presented on the ToRs Skeleton and revising the introductory elements (i.e. Preamble, Definitions, and Purpose). However, there is the first (and seemingly not-so-innocent) mismatch: the agenda unobserves a controversial item listed in Annex 1 of the skeleton, on the relationship with other agreements, instruments, and domestic law.

In the words of Dereje Alemayehu, Executive Coordinator of the Global Alliance for Tax Justice (GATJ), a global tax system as broken as the current one does not need a piece-by-piece recomposition but an integral redefinition. As such, this loose item can deviate the conversation and the complete process from the system’s needs, taking up the already scarce time this challenge has available.

That is why we recommend taking a step backward and reflecting on the motivations that mobilized this work in the first place, unifying several organizations over many years. These primary motivations should be the leading principles for the FCITC to cover. More specifically, this Framework Convention should aim for:

  1. Cooperation: The ever-so-connected forms of business and properties require a similar (if not a greater) interconnection within national tax systems. Nonetheless, that also means that national systems must identify, account for, and compensate for (when necessary) the impacts of their measures and decisions in other countries. In other words, the new version of our global tax system must be based on sovereignty and equal footing, to ensure that no country weighs its interests as superior to those of others and that the new global system reflects it.
  1. Justice: The achievement of fairer conditions should be considered at all levels. This means, for instance, addressing the unfair allocation of taxing rights that disproportionately affect developing countries. It also implies generating mandates that ensure the constituting mechanisms are equitable and progressive. For this to be true, transparency is requisite; without it, justice in all its forms will remain a utopia.
  1. Resilience: The global tax system must define its objectives clearly, with basic principles to be observed through their achievement. However, there must be space for implementing mechanisms to adapt and resolve emerging needs, as long as the considered alternatives remain coherent with the initial goals and principles. This is the only way for a system to be resilient in an ever-evolving context, especially when combating tax-related elusion and evasion, as well as the resulting resource leakages and illicit financial flows.
  1. Delivery: The world already agrees on the link between tax policies and countries’s potential to mobilize financing to fulfill international goals, obligations, and commitments related to guaranteeing human rights and gender equality, providing quality public services for all, promoting well-being and quality of life, achieving sustainable development and environmental protection, as well as increasing equality within and between countries. Nevertheless, no matter how many successive fixings have been proposed on the current schemes, they have not delivered improvements around these mobilizations, leaving behind generations of historically invisibilized groups and communities.

Finally, the definition of the specificities around these principles, their implementation, and the establishment of feedback mechanisms must observe the principle of inclusion, as there is no other way to ensure that the system becomes a living organism that learns, gets strengthened, and manages to adapt in the way global issues and crises require.

Lee el artículo original en inglés.