VShis week we will either witness a historic success in creating a more equitable global economy, or a terrible failure. A vote at the United Nations will decide on Wednesday, November 22, whether the future of tax decision-making will result from the negotiation of a truly inclusive framework convention, or whether a group of rich countries will succeed in maintaining the current arrangements, which are ineffective and exclusionary.
The importance of the vote on Wednesday, November 22 reflects the urgency of remedying the injustice and inefficiency of the current system of taxation of companies and large fortunes. It is also a call for the world to use multilateral principles to achieve multilateral solutions. Such success would demonstrate that the world can forge a different and better multilateralism – truly inclusive but also capable of delivering fundamental reforms.
Nearly a decade of multilateral negotiations on a global tax convention within the Organization for Economic Co-operation and Development (OECD) has failed to achieve sufficient progress. The process has generated innovative ideas and a technical basis on which to build a global tax system, but the kind of solutions the world needs are still far away.
Fair approach to defining global tax rules
Independent research shows that the OECD’s proposed solution would generate far less tax revenue than expected. Disappointed that the internal OECD process had produced so few results, several African countries launched an initiative to submit the issue to the United Nations entitled “Resolution on promoting inclusive and effective international tax cooperation within the United Nations”.
The African group’s proposal quickly gained impressive support from the G77 coalition of developing countries, which has been demanding a fair say in setting global tax rules for more than two decades.
The question that will arise on Wednesday is what rich economies like the United States and the European Union will do. If they oppose a binding UN framework convention (as they have signaled), they will send the message that they prefer the current ineffective and unfair arrangements to the possibility of reforms that would benefit their own citizens. by stemming the revenue losses that their governments are currently experiencing.
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