Unresolved rigged tax rules and privatized development are the major drawbacks of the UN Financing for Development Conference outcome, says Oxfam. However, after such tense negotiations there can be no doubt that developing countries’ determination to call for true global tax reform and tax cooperation has been noted, and cannot go unheeded for long.
Responding to the outcome of the Third UN Financing for Development Conference taking place in Addis from July 13-16, Oxfam International Executive Director, Winnie Byanyima said, “Today, one in seven people live in poverty and Addis was a once in a decade chance to find the resources needed to end this scandal. But the Addis Action Agenda has allowed aid commitments to dry up, and has merely handed over development to the private sector without adequate safeguards.
"Developing countries held firm in Addis on the need to set up an intergovernmental tax body that would give them an equal say in how the global rules on taxation are designed. Instead they are returning home with a weak compromise meaning rigged rules and tax avoidance will continue to rob the world’s poorest people.
“Fair taxation is vital in the fight against poverty and inequality. Citizens must be able to depend on their own governments to deliver the services they need. But it is just not logical to ask developing countries to raise more of their own resources without also reforming the global tax system that prevents them doing this.
"The various initiatives set out in Addis are welcomed if they will provide new and additional resources, guarantee sustainable and equitable development and contribute to ending poverty. Governments and international institutions should be under no illusions, however, as these initiatives can never be a substitute for the fundamental changes to the international financial system that are needed."
This is the first of three big summits this year. Responding to the opportunity 2015 presents, Winnie Byanyima said, “The UN Sustainable Development Goals Summit in September and the Paris Climate Summit in December will provide two more opportunities for governments to act in the name of development and rebalance power to the world’s poorest people. Citizens from all around the world must continue to challenge rigged rules that favor vested interests, and governments must listen. 2015 can still deliver the change we need towards a fairer future.”
Notes to editors:
Details on specific outcomes -
- Tax: Developing country governments had held out for an intergovernmental tax body under the UN which would have representational legitimacy, real decision-making power, and the right expertise to reform the governance of global taxes. Negotiations went up to the wire with developing countries holding firm to secure an agreement. Despite this, the changes secured only tweaks to what we already have in the existing UN Tax Committee of Experts. There is no significant change in status or resourcing. What’s more it definitely does not signal a move away from dominance of the global tax agenda by the OECD. Ultimately it has been an exercise in naked power.
This issue is not going to go away, and governments must be courageous to take international tax reform to the next step.
- Overseas Development Aid
: Recommitting to the 0.7% ODA/GNI target was critical to show continued solidarity and justice for the world's poorest communities and countries. Unfortunately the Agenda, falls well short of the necessary time-bound, actionable commitments needed to deliver an ambitious and transformative development agenda. With limited public resources like aid ensuring that each dollar is spent as effectively as possibly will be vital.
- Private finance: The outcome document puts private finance front and centre of financing for development especially encouraging the use of Public-Private Partnerships and blended financing instruments. However, there is little language in the document to ensure that private finance will deliver for sustainable development, including little language to ensure the building of a strong international framework to protect human rights, social and environmental accountability and ensure the ability of the state to regulate in the public interest.
- Climate change: Though several developing countries spoke of the devastating impacts of climate change which are already affecting their populations today, the FFD has barely dealt with the huge additional burden which will be faced by countries least responsible for causing the problem. Though mainstreaming of climate change into aid is essential, it is not enough. It is unacceptable that an increasing share of aid is used as public climate finance – 17 per cent in 2013 – while overall aid budgets are barely growing. Climate finance is central to the politics of the Paris climate deal later this year, so in the next six months finance ministers have their work cut out to help seal a deal that keeps global warming below two degrees. They need to commit to put a stop to the diversion of existing aid to address climate change, and ensure real new resources are put on the table from government budgets and new and predictable sources of public finance. The European Union should kickstart the process, by ensuring that the financial transaction tax that is being set up in 11 EU countries, as well as the European carbon market helps feed the Green Climate Fund.