Let's reach 2015! Join SID to support ASAP petition campaign to end tax abuse
Join SID to support the petition campaign launched by Academics Stand Against Poverty (ASAP) calling on UN Secretary General Ban Ki-moon to support the inclusion in the Sustainable Development Goals (SDGs) of robust targets for curbing tax dodging.
The petition builds on the results of a Delphi study examining the policies that would make the greatest impact on illicit financial flows if included in the SDGs.
SID has joined ASAP together with other organizations advocating the inclusion of these policies in the new development framework.
So far the campaign has collected 340 signers. Let's reach 2105! Visit ASAP's petition page Avaaz.org.
For questions about the campaign or the Delphi study, contact Global Coordinator Rachel Payne at email@example.com
Ban Ki-moon: Tell the UN to Put an End to Tax Abuse
His Excellency Ban Ki-moon
United Nations Secretary-General
United Nations Secretariat
New York, NY 10017
Dear Mr. Secretary General:
We, members of Academics Stand Against Poverty (ASAP) and other poverty researchers, advocates, teachers, and students, urge you to support the inclusion in the Sustainable Development Goals (SDGs) of a robust goal to curb tax abuse by building transparency into the international financial system. We have held expert consultations to determine how the SDGs can best curtail tax abuse and now write to offer some expert-vetted proposals.
Tax abuse constitutes a massive headwind against development. One common form of it is trade misinvoicing, used by multinational corporations (MNCs) to shift funds to affiliates in other jurisdictions that tax profits at lower rates or not at all. The think tank Global Financial Integrity estimates that $4.7 trillion were thus siphoned out of developing countries during the 2002-2011 period, $760 billion in 2011 alone. This is five or six times the sum total of all official development assistance flowing into these countries during the same periods. These numbers have been increasing at a rate of 8.6% per year. And they don’t even include other important forms of MNC abusive transfer pricing that are difficult to quantify. Even so, Christian Aid calculates that governments of developing countries have lost tax revenues of around $160 billion annually — about $2.5 trillion for the 2000-2015 Millennium Development Goals (MDG) period. “If that money was available to allocate according to current spending patterns, the amount going into health services could save the lives of 350,000 children under the age of five every year.”
Tax abuse is also practiced by wealthy citizens of developing countries. Boston Consulting Group estimates that 33% of all private financial wealth owned by people in Africa and the Middle East and 26% of such wealth owned by Latin Americans — some $2.6 trillion in total — is kept abroad. On conservative assumptions, this translates into revenue losses of $26 billion annually just for these two continents, and the problem is larger still for Asia.
The SDGs have the potential to catalyze global action to stop tax abuse. We commend the Open Working Group on Sustainable Development Goals for including tax abuse in their SDG draft. However, because of the crucial role of tax abuse in perpetuating poverty, underdevelopment, and global inequality, we believe that their draft needs to be improved in this respect. As it is, tax abuse is barely mentioned. Target 16.4 says that illicit financial flows should be reduced and Target 17.1 calls on the world’s governments to: “Strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection.” These vague wishes fail to address the structural roots of illicit financial flows and are therefore unlikely to deliver the dramatic reduction in tax abuse necessary for the achievement of the SDGs.
ASAP recently completed a Delphi study on how the SDGs can best address the problem of illicit financial flows. Twenty-seven experts from various backgrounds – including academia, the private sector and national and international governmental and nongovernmental organizations – participated in the study, which revealed overwhelming expert support for policies to increase financial transparency at both the domestic and global levels. The experts agreed that the SDGs should call on all governments to mandate:
- that each company, trust or foundation disclose the natural person(s) who own or control it,
- that each MNC report profits and other tax-relevant information separately for each country so as to make apparent when tax havens account for a much larger share of its profits than of its operations,
- that national tax authorities automatically exchange tax-relevant financial information worldwide to make it easier to detect and prosecute tax evasion by corporations and individuals,
- that corporations publicly report on funds they pay to governments for the extraction of natural resources,
- that tough sanctions, including jail time, be imposed on senior officers of global banks, accounting firms, law firms, insurance companies and hedge funds for facilitating tax evasion.
In addition, the experts agreed that governments themselves should commit to
- harmonizing anti-money laundering regulations internationally and
- carrying out clear, reliable, frequent and timely public fiscal reporting and opening up their fiscal policy-making process to public participation.
Including these objectives as targets or indicators in the final SDG document would boost the prospects of reforms that are essential to curtailing tax abuse as well as embezzlement, money laundering, and other criminal activities.
Curbing illicit financial outflows from developing countries is a human rights issue. Article 25 of the Universal Declaration of Human Rights guarantees the “right to a standard of living that is adequate for the health and well-being of oneself and one’s family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond one’s control.” These rights remain unfulfilled for much of the world’s population. About half of all human beings suffer serious deprivations of one such kind or another and lack access to the necessary social services that would protect them.
The first-line responsibility for these human rights deficits lies with the governments of the countries in which the poorer half live. But many of these lack the resources to meet those obligations. The envisioned reforms would help developing countries attain the revenues necessary to safeguard their citizens’ human rights. This effort would achieve much more than the foreign aid envisioned by the SDGs; and for many developing countries this step toward basic global justice would mean more than any amount of charity.
Curbing tax abuse would make a crucial contribution toward achieving the whole SDG agenda. We therefore urge you to work for strong targets on tax and illicit financial flows, in your Synthesis Report and throughout the coming year of intergovernmental negotiations. As an international network of academics, ASAP stands ready to support you in this important endeavor.
Never before has there been so much popular support and political will to end the scourge of tax abuse. In the face of massive lobbying efforts to prevent or dilute any reforms, the UN should seize this special opportunity to help build a more transparent financial system and thereby to diminish a crucial obstacle to development and poverty eradication.