US blocking on tax issues at Addis Summit, could threaten negotiations

Once in a decade opportunity to repair global tax system, leaders can’t afford to fail at UN Summit

​Blocking from US, Japan, EU over tax body threatens negotiations at FfD Summit

ADDIS ABABA—As decision makers continue to deliberate in Addis Ababa for the 3rd Financing for Development Conference (FfD), blocking from the US, Japan and European nations on the issue of a global tax body to combat international tax dodging and illicit financial flows is threatening to derail the entire summit.

“Governments have a chance this week to create an equitable body to tackle the problems of tax dodging and corporate opacity,” said Pooja Rangaprasad of the Financial Transparency Coalition. “But if the status quo remains, and standards continue to be set by the Organization for Economic Cooperation and Development (OECD), we will be stuck with an unjust system that can’t solve the problem of illicit financial flows. The rest of the world will remain on the outside looking in.”

The OECD currently sets new standards in multinational profit shifting and cross-border tax dodging. However, the OECD is made up of just 34 rich countries. At the FfD Conference, government representatives have a chance to create an intergovernmental tax body under the United Nations that would include more than 100 developing countries that are currently excluded from the decision making process.

“African nations are at the epicenter of the crisis of illicit financial flows, yet they are not even in the room when decisions are being made,” said Alvin Mosioma, Executive Director of the Tax Justice Network Africa. “A global tax body is one important step in fixing this global problem.”

The FfD Conference is the only global platform for countries to decide on how to finance development effectively. A failure in Addis Ababa will threaten the post-2015 agenda, climate change talks, and the sustainable development goals to be decided later this year.

“It makes absolutely no sense that rich country governments are ready to jeopardize the global tax system, as well as the post-2015 and climate negotiations, just to make sure that poor countries continue to be excluded from the decision making on global tax standards,” said Tove Maria Ryding, Tax Justice Coordinator at the European Network on Debt and Development.

The rising level of illicit financial flows directly affects how much governments are able to fund the drivers of development, like education, infrastructure, and health.

“The poorest of people bear the brunt of this problem, yet the solutions are only made by the Paris-based OECD,” said Joel Akhator Odigie of the African Regional Organization of the International Trade Union Confederation.

“Governments from across Latin America are united in calling for a political body on tax,” said Jorge Coranado, President of Latin American Network on Debt Development and Rights. “This call isn’t new, but now only a few blockers remain. We have been told it’s ‘time for global action’, we can’t afford to fail.”

​Source: Financial Transparency Coalition

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