Addressing the first global conference on 'Taxation and the SDGs', organized by the Inter-agency Platform for Collaboration on Tax, Vodafone explained that the private sector should help governments build tax capacity in order to create a good environment for their business, which will facilitate return of investment.
McGill University highlighted that unless BEPS monitors the use of revenue to ensure that tax revenue is spent in line with the SDGs, BEPS will not necessarily support the SDGs.
16 February 2018: Participants in the first global conference on ‘Taxation and the SDGs’ discussed challenges and opportunities in using taxation to advance resource mobilization for the SDGs. Governments and stakeholders particularly stressed the need for: capacity building for national tax administration, including for digitalization; coherence between different processes and fora; and eliminating the race to the bottom.
The conference was held from 14-16 February 2018, at UN Headquarters in New York, US. It was the first conference organized by the Inter-agency Platform for Collaboration on Tax, a joint initiative of the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), the UN and the World Bank, which aims to facilitate cooperation among these organizations.
Opening the meeting, Alexander Trepelkov, Financing for Development Office, UN Department of Economic and Social Affairs (DESA), said taxation must play a key role if countries are to reach the level of domestic resources mobilization (DRM) necessary for achieving the SDGs. Elfrieda Stewart Tamba, Commissioner General, Liberian Revenue Authority, and co-chair of the Addis Tax Initiative (ATI) Steering Committee, noted that both public education and a strong capacity for enforcement are essential for promoting tax compliance. She said the OECD’s Base Erosion and Profit Shifting (BEPS) initiative could help countries design national strategies for tax revenue for SDGs.
Jeffrey Sachs, Director of the Center for Sustainable Development, Columbia University, said the meeting should be about collaboration, stopping tax havens, stopping illicit financial flows (IFFs), and effectively raising revenue domestically in rich countries to subsidize social services, instead of favoring the rich. He stressed that countries should aim for at least 20% tax revenue to gross domestic product (GDP).
John Connors, Vodafone, announced that the B Team and nine companies launched The Responsible Tax Principles on 9 February 2018. He said the Principles include a clear commitment for tax compliance, and for engaging with governments in an open and transparent way, to help them build capacity. He added that helping governments build tax capacity is not an altruistic act, but helps companies create a good environment for their business to facilitate return of investment. The nine companies are Allianz, BHP, A.P. Moller-Maersk, Natura Cosméticos, Repsol, Safaricom, Royal Dutch Shell Plc, Unilever and Vodafone Group Plc.
Masaaki Kaizuka, IMF, announced that Japan will make an additional contribution of US$2.5 million to the World Bank’s Tax Program and earmark a certain portion to finance for the Platform’s work. He added that Japan will continue its financial support, provided that there is visible progress towards real coordination through the Platform.
In a session on ‘DRM, Fiscal Sustainability and Growth: Evidence to Date,’ Augusto de la Torre, Columbia University, noted that taxes can either harm or support economic growth, depending on how they are collected and spent. He explained that tax loopholes tend to subsidize inefficient enterprises that manage to evade tax, while other corporations are subsidizing those inefficient enterprises by paying taxes.
Dana Reizniece-Ozola, Minister of Finance, Latvia, said Latvia has shifted the tax burden from labor to capital in order to reduce inequality. As way of staying competitive while trying to bring tax revenue to GDP ratio at 33%, she underlined strengthening the capacity of the tax administration. She also noted that Latvia ensured buy-in by deciding its tax reform targets through a multi-stakeholder process. Marta Beatriz Gonzalez-Ayala, Paraguay, said Paraguay has a very simple online tax system, which has helped increase the number of tax payers by 40%.
During a segment on ‘Tax Administration: How Tax Administration Can Contribute to Achieving the SDGs,’ Juan Toro, IMF, said revenue administrations need to align their revenue allocations with the SDGs, in addition to strengthening collection capacities. Hans Christian Holte, Norwegian Tax Administration, stressed the importance of third-party information. He explained that when the Norwegian state started to publicly disclose the information obtained from financial institutions, tax compliance significantly increased.
Tusabe Richard, Rwanda Revenue Authority, emphasized the need for capacity building on statistics for tax administrations, to enable them to use the data they collect to inform policy for compliance. He stressed that capacity building interventions need to be demand-driven by the national tax administrations and not supply-driven by donors, in order to make sure that they really address the capacity-building needs of countries.
In a session on ‘International Tax, BEPS and the SDGs,’ Allison Christians, McGill University, suggested favoring the criteria of revenue expenditure domestically used for sustainable development, rather than the current criteria of value creation. Unless BEPS monitors the use of tax revenue to ensure it is spent in line with the SDGs, she said, BEPS will not necessarily support the SDGs. By contrast, Janine Juggins, Unilever, called to decide on the changes needed in the international tax system to support investment in developing countries, in order to increase the “tax pie” in all countries, rather than focusing on the distribution of taxation rights. She also noted that double taxation is a concern for businesses, saying that Unilever would support joint audits because of the lack of coherence in taxation laws.
Ariel Sigal, Treasury Ministry of Argentina, highlighted the attribution of revenue between developed countries, saying that revenue attribution is a sensitive political matter and needs a convention to agree on a solution. He also stressed the need for better, not more, tax treaties.
Alvin Mosioma, Executive Director, Tax Justice Network Africa, called for addressing the issue of healthy tax competition. He explained that countries are not companies: companies can fail and wind up, but countries cannot. Even though the best countries for multinational enterprises (MNEs) are those that tax the least, he observed, that is not sustainable for national governments.
Cheikh Ahmed Tidiane Ba, Director General of Taxes and Domains, Senegal, called to increase capacity building for: digitization; taxing newly-discovered sectors, such as oil and gas; and better negotiating tax treaties. Pascal Saint-Amans, OECD, announced that Serbia joined BEPS on 15 February.
During the three days of discussions, other participants addressed issues related to inter alia: institutional frameworks to protect tax administrations from political interventions and thus from volatility in regulations that leads to low tax compliance; taxes on “bads” associated with effectively implementing the SDGs, such as sugar, environmental externalities, fast food, and tobacco; or the dangers and opportunities presented by a potential implementation of an international inventory of assets.
At the closing segment on 16 February, Antoinette Sayeh, Center for Global Development, drew attention to a statement of the Platform Partners. It notes that, subject to resource availability, the Platform intends to work in a range of areas, including: strengthening international tax cooperation; building institutions through Medium Term Revenue Strategies (MTRS); and promoting partnerships and stakeholder engagement. The Statement also identifies a series of “immediate and concrete” actions that the Partners plan to undertake, including:
- scaling-up joint work to support developing countries to address tax transparency BEPS, including on treaties;
- providing coherent and consistent international tax policy advice;
- completing the Platform Toolkits to help countries address challenges in international taxation;
- analyzing and reporting on the spillovers and opportunities from changes in the international tax environment on and for developing countries;
- supporting the development of country-led MTRS, including through the involvement of bilateral partners, and reporting on outcomes;
- helping developing countries access the knowledge, experience and good practices in tax administration, starting with the use of technology;
- supporting the participation of developing countries in tax policy discussions at international fora;
- launching a multi-year ‘Tax and SDGs Program,’ that will include components on taxation and health, education, gender, inequality, environment, and infrastructure;
- and providing guidance and recommendations on the tax treatment of ODA-funded goods and services.
Jan Walliser, World Bank, observed that the high level of attendance and interest in the conference reflect that tax and revenue generation are gaining a central role in SDG implementation. [Conference Website] [Platform Partners’ Statement] [UN Press Release] [SDG Knowledge Hub Sources]