By failing to take concrete action on illicit financial flows and tax dodging in Addis Ababa, questions remain on how domestic resources will be raised
Without a globally inclusive standard setting body, developing countries have an uphill battle to realize needed revenues to fund development goals
WASHINGTON— As world leaders hail the adoption of the Sustainable Development Goals (SDGs) in New York City this weekend, the reality of how to pay for them will set in, causing unease for developing countries that are still on the sidelines in writing global tax standards.
“We saw in Addis Ababa that rich countries didn’t really want to give up their power in setting global tax standards,” said Pooja Rangaprasad of the Financial Transparency Coalition. “But ensuring that developing countries can harness their own domestic resources, including revenue that will come from curbing illicit financial flows and tax dodging, is central to the success of the new development goals.”
At the 3rd Financing for Development Conference in July, many developing country governments wanted to upgrade the United Nations expert tax committee to an intergovernmental body, which would give it the political and financial backing to feed into the global standard setting process. The proposal was blocked by a number of rich countries, including the US, UK, and Japan.
“The SDG Summit comes on the heels of a conference that was meant to address how to pay for development,” added Rangaprasad. “Though negotiators in Addis Ababa took a step in the right direction by identifying illicit financial flows and tax dodging as obstacles, they missed a historic opportunity to concretely address these issues by failing to secure either concrete policies to increase transparency or a globally inclusive standard setting body, that will help curb such outflows.”
The Organization for Economic Cooperation and Development (OECD), a group of just 34 wealthy nations, has been at the center of new initiatives to address tax evasion and illicit financial flows, but developing countries have largely been left out of the process to write the new rules.
“Though developing countries were simply asking for a seat at the drafting table when pen was being put to paper, it seems like the OECD would rather invite them into the process once the ink is dry,” said Porter McConnell, Director of the Financial Transparency Coalition.
Source: Financial Transparency Coalition