Thread by @alexcobham

Fascinating discussions today at the @UN_PGA's high level event on illicit financial flows
un.org/pga/73/event/i…

Great opening speeches, with @UN_PGA highlighting the central role of tax avoidance and tax evasion in illicit financial flows

First panel showed the real range - from @alvinmosioma reflecting the African leadership on illicit flows through the Mbeki panel, and its clear focus on multinationals' tax abuses, to US and Interpol speakers reverting to the narrow comfort zone of individual criminality

Very interesting remarks from Norwegian and Guatemalan ministers, reflecting their own experiences. Norway laying out an agenda for
1 Accelerated cooperation
2 Far-reaching transparency
3 Unflinching justice
(and a great shout out to the work of @TJNNorge)

The energy in the room is very clearly for new international instruments and measures to address tax-related illicit flows especially.

But also attempts from OECD and US speakers to narrow back down - including really disappointing emphasis on 'capacity-building' as alternative

Plenary session now: brilliant statement from Palestine on behalf of the G77, nailing exactly why and how multinationals' tax abuses must remain in the scope of illicit financial flows.

On which, here's @nickshaxson: ftalphaville.ft.com/2019/05/16/155…

Norway now speaking in plenary, on their commitment to the ABC of tax transparency:
Automatic multilateral exchange of tax info
Beneficial ownership transparency
Country-by-country reporting, publicly, by multinationals

Nigeria now adding their strong support to Palestine's G77 position, advocating for a new UN convention on tax matters

Also proposing a global equivalent to the pathbreaking Mbeki panel on IFF out of Africa

Hungary talking of the illegal flow of people, as well as money.

[rest of tweet deleted due to offensive content]

Big shout out from Mexico to the process to establish indicators and methodologies for SDG 16.4

EU representative focuses on the old corruption narrative (tax? What's that?)

Speaker from Malawi for LDC group interrupted by a sudden, Agatha Christie-esque plunge into darkness. Half expected to see a delegate sprawled on the floor when the lights came up. Strong call for supportive international measures

Senegal associates itself with Palestine's G77 position, and calls for mapping and quantification of IFFs to guide international progress; countermeasures vs havens; and *notes with concern the ongoing attempt to reduce the IFF definition to exclude tax abuses by multinationals*

Senegal also joins the call for a global high level panel to assess illicit financial flows, a la Mbeki panel

And highlights that UNCAC is not fit for purpose to combat IFF, and also calls for a *UN tax convention*

Senegal was speaking on behalf of the African group. (Now lunch, then panel 2 on new instruments...)

Picking up the thread after the afternoon panel (seemed rude to live-tweet from the stage)

I spoke about the two reasons we need a new international instrument to fight illicit financial flows...

https://twitter.com/caesq/status/1129107682500198407?s=19

First, the understanding of corruption has changed. The old view of corruption as a lower-income country problem, a reason why donor countries' aid is not effective, has been largely consigned to history.

That view has been overtaken by a recognition that corruption - including tax avoidance and evasion - is driven by the financial secrecy offered mainly by high-income countries and their private sector actors

... But the global revenue losses associated with undeclared offshore assets (perhaps $200bn a year) and multinationals' profit shifting (c. $500bn a year) represent a larger share of tax revenues for lower-income countries

Tax delivers the four Rs: not just Revenue but the scope for Redistribution to curb inequality; Repricing to curb social bads like tobacco and carbon emissions; and, crucially, political Representation.

Tax is the glue in the social contract between states and citizens & the 'pain' of paying tax is what drives people to hold their governments accountable. Hence tax as a share of public spending is one of the very few things consistently associated with improving governance

So the global inequality in the distribution of taxing rights that faces lower-income countries, is not only an inequality in revenues to support public spending, but also in the scope to redistribute, and in the prospects for effective political representation and 'good' states

The other reason we need a new instrument is the failure of the existing architecture. Some elements are globally inclusive, but partial - eg UNCAC largely reflects the old corruption narrative

And that's the good bit. Some elements of the global architecture are both globally unrepresentative *and* fail to reflect the new agenda. Here's the OECD...

On transparency, the OECD has been the body chosen by G20 etc to deliver the policy platform that @TaxJusticeNet first put forward in the early 2000s: the ABC of tax transparency.

A for automatic, multilateral exchange of tax info - the end of bank secrecy. Except that the OECD Common Reporting Standard systematically excludes lower-income countries:

Member countries 103
Middle-income 30
Least developed 1

B for beneficial ownership transparency via public registers - the end of anonymous companies, trusts and foundations. Now the emerging international standard. Except that the USA refuses, allowing Cayman et al to follow suit, and the OECD apparently powerless.

C for country-by-country reporting, publicly, by multinational companies - to reveal the misalignment between where profits are declared, and the location of real economic activity. Now an OECD standard, based on the @TaxJusticeNet original. Except that it's not public, and...

And again, lower-income countries are systematically excluded.

Members of country-by-country reporting information exchange agreements:

All countries 74
Middle-income 17
Least developed 2

Figures are from the Financing Sustainable Development Report 2019 btw developmentfinance.un.org/fsdr2019

Turning from transparency to tax rules, the picture is no better. The OECD Base Erosion and Profit Shifting process (BEPS), 2013-15 had a single aim: to reduce the misalignment between profits and real activity. It failed.

Lower-income countries had minimal influence, but were pushed to sign up to the BEPS outcomes anyway, to join the OECD 'Inclusive Framework'. Now that there's a BEPS 2.0 coming, the IF might even have some influence...

But as the Indian negotiator memorably said, "Just because you call something 'inclusive', it doesn't make it inclusive"

Recall that global inequalities in taxing rights are stacked against non-OECD members. And that the OECD has largely set the rules that cause this.

I'd love to think BEPS 2.0 will deliver for lower-income countries. But if you really believe it will, I have a bridge to sell you.

Ultimately, tax and transparency rules that deliver the global distribution of taxing rights must be set in a legitimate, representative and transparent forum. And that means the UN.

Tax justice must not only be done, but must be seen to be done.

And so the new instrument that is needed, as the G77, Africa group and Least Developed Countries group said today, is a UN tax convention. At a minimum, it needs to deliver the ABC and a forum to negotiate tax rules.

OECD countries should not see a shift to a UN tax forum as making them the losers in a zero-sum game. (Although if they do, they should reflect that on this reading they are currently forcing non-OECD countries to be the losers.)

In fact, there is only a small number of countries that consistently benefit from providing financial secrecy and procuring profit shifting, to the detriment of all others. While these will inevitably be the losers when their damage is curtailed, most others stand to benefit.

In giving up a little of their current disproportionate power, many OECD countries could share in the benefits of a better, fairer and more transparent alternative via a UN tax convention.

And, happy days, investors too stand to benefit. That's because evidence shows that multinationals' tax dodging currently yields no higher return for investors, but *does* increase the risks investors face.

Other speakers on the second panel were great. Babatunde Fowler, head of the Nigerian tax authority and @ATAFtax chair, made a direct contribution on the centrality of multinational tax abuse to the IFF agenda:

"We see tax not paid as corrupt"

Irene Ovonji-Odida of @icrict spoke powerfully about tax - and the associated implications for public services, inequality and state legitimacy - as a critical issue for global development, necessarily to be addressed globally.

Elsa Gopala-Krishnan of UNODC surveyed the role of UNCAC and its implementation review mechanism in delivering consistent data on stolen asset recovery

And Pooja Rangaprasad of SID made the key argument - that the negotiation of such a thorny global issue, in full transparency, inclusively and with a neutral secretariat, is exactly what the United Nations was created for.

Questions from the floor covered a range of issues, and the subsequent plenary saw many additional statements of support for a UN tax convention. Really struck by the momentum, and it now raises the question of how EU countries will respond. Can they ignore the demand?

I went to New York hoping @TaxJusticeNet would not be a lone voice for a convention. Instead, we are one voice in a positive choir of support. Civil society colleagues have done sterling work, and countries from all income levels are fully engaged.

Many congratulations and thanks to @UN_PGA for organising such a fantastic event - and just maybe, for setting in motion a process that could change the world.

@threadreaderapp unroll please