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	World losing half a trillion dollars a year to tax abuse by Tax Justice Network, OHCHR, agencies   Mar. 2025   Fair and effective tax policies needed to advance equality   The UN Committee on Economic, Social, and Cultural Rights today called on States parties to design and implement their tax policies to promote economic, social and cultural rights and reduce high levels of inequality.   In a statement issued today, the Committee, emphasized that sound fiscal policies, including both the mobilization of sufficient resources and adequate social spending, are essential to realize economic, social and cultural rights.   “Taxation is a key instrument for mobilizing resources to implement economic, social and cultural rights and to address poverty and socio-economic inequalities.”   At domestic level, the Committee identified situations where regressive ineffective tax policies hamper the capacity of States parties to fulfil economic, social and cultural rights. “One such example is a tax policy that maintains low personal and corporate income taxes without adequately addressing high income inequalities.”   It also highlighted the negative impacts of consumption taxes such as value-added tax (VAT). “VAT can have adverse impacts on disadvantaged groups such as low-income families and single parent households, who typically spend a higher percentage of their income on everyday goods and services.”   The Committee called on governments to shift towards more equitable tax structures, from relying on indirect taxes to a more direct income taxation approach, to ensure that high-income and wealth groups and large corporations contribute their fair share to national revenue.   A well-designed tax system, the Committee observed, should not only generate sufficient public revenue but also serve as a tool for reducing socio-economic inequalities.   It called for comprehensive assessments of the impact of existing and proposed tax policies through transparent, evidence-based processes, ensuring that taxation fosters rather than hinders economic, social and cultural rights.   These assessments shall include the overall distributional impact and the tax burden on different income groups, women, and other disadvantaged groups, and the benefits and impact of various tax exemptions, including those related to natural resources.   At the international level, the Committee welcomed General Assembly Resolution 78/230, which lays the groundwork for a United Nations Framework Convention on International Tax Cooperation to improve international coordination in tackling tax evasion, illicit financial flows, and corporate profit-shifting.   “Low effective corporate tax rates, wasteful tax incentives, lax regulation of illicit financial flows, tax evasion and tax avoidance, and the permitting of tax havens and financial secrecy drive a race to the bottom, depriving other countries of significant resources for public services on health, education, housing, and for social security and environmental policies.”   The Committee underscored the duty of States to regulate financial institutions and corporate entities within their jurisdiction to prevent tax abuse.   “States parties should take all measures to combat illicit financial flows by business enterprises operating within or domiciled in their territory, including through the adoption and enforcement of mandatory due diligence mechanisms.”   It further called for stronger international cooperation to build an inclusive, fair and effective global tax governance, including measures to enhance financial transparency, eliminate tax havens, and implement a globally coordinated minimum corporate tax rate.   “Aligning tax cooperation with the obligations under the Covenant can contribute to the effective mobilization of resources and redistribution of wealth, thereby addressing high levels of inequalities and facilitating substantial investments in the institutions, public services and programs essential for the realization of economic, social and cultural rights for all,” the Committee said.   http://www.ohchr.org/en/press-releases/2025/02/fair-and-effective-tax-policies-needed-advance-economic-social-and-cultural   Nov. 2024   World losing half a trillion dollars a year to tax abuse, reports the Tax Justice Network   Countries are losing US$492 billion in tax a year to multinational corporations and wealthy individuals using tax havens to underpay tax, the Tax Justice Network’s annual State of Tax Justice shows.   Nearly half the losses (43%) are enabled by the eight countries that remain opposed to a UN tax convention: Australia, Canada, Israel, Japan, New Zealand, South Korea, the UK and the US.   With countries set to vote shortly at the UN on whether to finally enter formal negotiations on the meat of a UN tax convention, the Tax Justice Network is urging all countries to vote in favour of the negotiations: “Governments now have a chance to choose differently at the UN, to choose to use tax to protect people, economies and planet.”   The negotiation of a UN tax convention is widely seen as the biggest shakeup in history to the global tax system, and previously reported as the world’s best chance to avert losing nearly US$5 trillion to tax havens over the next decade in last year’s edition of the State of Tax Justice.   Of the US$492 billion lost to global tax abuse a year, two-thirds (US$347.6 billion) is lost to multinational corporations shifting profit offshore to underpay tax. The remaining third (US$144.8 billion) is lost to wealthy individuals hiding their wealth offshore.   The eight countries that remain opposed to a UN tax convention – dubbed “the hurtful eight” by the Tax Justice Network – cost the world US$212 billion in tax losses a year by enabling multinational corporations and wealthy individuals to use their financial systems to underpay tax in other countries.   These eight countries – all OECD members – were the only ones to vote against the pre-negotiation terms agreed by a large majority in August this year on what the parameters and goals of the UN tax convention would be. Some 110 countries voted in favour of the ambitious terms and 44 abstained.   The vote saw the collapse of the OECD voting bloc – which had voted almost unanimously in all previous votes in the UN process – when most OECD countries, including all EU countries, abstained.   Most of the responsibility for enabling global tax losses among the hurtful eight lies with the UK and its “second empire” of British dependencies like the British Virgin Islands, Cayman and Bermuda, for which the UK is responsible for extending its ratification of UN conventions to, and where the UK can impose or veto the law.   OECD countries altogether, including the 30 members which either abstained or voted in favour, continue to be responsible for over two-thirds (69%) of all countries tax losses.   For each US$1 the hurtful eight collected in tax from enabling global tax abuse, the rest of the world lost US$16 in tax, demonstrating the extreme waste of the current arrangements that the hurtful eight voted to preserve.   Some of the biggest enablers of global tax abuse are also the world’s biggest losers to global tax abuse – an outcome that highlights the lose-lose nature of the global tax abuse model. Altogether, the eight “no” voters lost US$177 billion a year. Countries that abstained lost US$189 billion a year. Countries that voted “yes” lost US$123 billion a year.   On average, higher income countries lose taxes equivalent to around 7% of their public health budget. For lower income countries, that loss is five times bigger, at around 36%.   The eight ‘no’ voting countries, meanwhile, lose an average of 5% of their health budget – while both the abstaining group of countries and the ‘yes’ voters lose at least twice as much on average. EU countries, which make up most of the abstainers, are the world’s biggest losers as a region, altogether losing US$176 billion a year.   Alex Cobham, chief executive at the Tax Justice Network, said:   “The hurtful eight voted for a world where we all keep losing half a trillion a year to tax-cheating multinational corporations and the super-rich. The UK and the US are both among the biggest enablers and the biggest losers of this lose-lose tax system, and their people consistently demand an end to tax abuse, so it’s absurd that the US and UK are seeking to preserve it. It’s perhaps harder to understand why the other handful of blockers, like Australia, Canada and Japan, who don’t play anything like such a damaging role, would be willing to go along with this.   “Equally baffling is the indecision from the abstaining countries, particularly EU countries who are the world’s biggest regional loser to global tax abuse. Faced with a US$176 billion annual tax loss and dangerous political pressures, EU countries must choose between accepting Trump’s veto at the OECD, or working with the rest of the world at the UN to make real progress. When history comes knocking, staying on the fence is not a serious answer.”   Rising tax losses a verdict of failure on OECD tax reforms   The eight blocking countries claim they oppose a UN tax convention on the grounds that it would “duplicate” the work of the OECD, a small club of rich countries including major tax havens. Originally established as a technical advisory outfit, the OECD has operated as the world’s de facto decision body on global tax rules for over 60 years – a role that would be supplanted by the UN once a UN tax convention is established.   A first-of-its-kind historical trend analysis included in this year’s edition of the State of Tax Justice, based on data from the OECD itself, finds that the OECD has comprehensively failed to achieve the central focus of its work since 2013: namely, to reduce countries’ tax losses due to multinational corporations shifting their profit offshore.   Between 2016, when countries first began to implement the OECD’s Base Erosion and Profit Shifting (BEPS) reforms, and 2021, the latest year for which data from the OECD on multinational corporations’ profits is available and by which point the reforms had been fully implemented, countries’ annual losses to multinational corporations shifting their profits offshore went up by more than US$36 billion from US$311 billion in 2016 to over US$347 billion in 2021.   While the first BEPS process is already widely considered a failure by economists, tax experts and policymakers, as is implied in the G20’s decision that the OECD should immediately begin work on ‘BEPS 2.0’, the transparency data on multinational corporations’ profits for the period 2016 to 2021 published by the OECD after years of resistance and delays provides the strongest evidence to date of the failure of BEPS.   The OECD committed to deliver the BEPS 2.0 reforms in two years, by 2020. The continuing failure to finalise any agreement, after a process three times as long as scheduled, has shaken confidence in the organisation’s ability to achieve agreement even among member states.   The ‘Inclusive Framework’, meanwhile, has been heavily criticised for failing to provide an effective voice for non-OECD members. And while the US has dominated the decisions taken on each of the two ‘pillars’ of the OECD proposals, the incoming US administration has threatened economic countermeasures against countries that implement the proposals, including the EU.   Even if the two pillars were to be finalised and implemented, independent analysis has shown that they would generate much less new revenue than the OECD had claimed. In addition, the proposals have been so heavily influenced by lobbyists that the great bulk of new revenues would go to corporate tax haven jurisdictions, rather than the countries that lose out under the current rules.   The new evidence on the OECD’s failure, exacerbated by uncertainty around the incoming Trump administration, raises significant questions for the abstainers. This applies particularly to EU countries, who will continue to lose the most in tax under OECD tax rules, while likely finding the OECD as a forum increasingly less cooperative, and potentially even hostile to EU values and interests, during a Trump administration.   The Republican-dominated US House Ways and Means Committee has already written to the head of the OECD to remind him that the US is the organisation’s largest funder.   These developments provide further reasons for countries to support the negotiation of an ambitious UN tax convention. Active US attempts to undermine the two pillar proposals can only add to dissatisfaction with the OECD’s responsibility for designing a global tax system that loses nearly half a trillion dollars to tax havens every year, with the OECD’s failure to include the majority of countries meaningfully in its decision-making process, and ultimately with its decade-long failure to end global corporate tax abuse.   Alex Cobham said: “The hurtful eight want to stick with OECD tax rules that the OECD’s own data demonstrates have failed utterly. They’re choosing to keep losing billions to tax havens, and have been forcing this choice on the rest of the world for decades. But the rest of the world has had it, and that’s why they want to move tax rules to the UN, where they can’t be held hostage.”   Over the same period in which multinational corporations increased their tax cheating, countries on average cut their corporate tax rates by 3 percentage points, the State of Tax Justice’s analysis of the OECD’s data on multinational corporation’s profits for 2016 to 2021 further reveals.   Despite corporate tax rates dropping, multinational corporations shifted more profit into corporate tax havens, rising to the highest value yet recorded in the State of Tax Justice reports, at US$1.42 trillion in 2021.   Asked to pay less tax, multinational corporations cheated more, the data shows.   Had corporate tax rates stayed where they stood in 2016, countries’ tax losses in 2021 would have been US$32 billion higher, at a total of US$380 billion. Countries effectively surrendered US$32 billion in tax to multinational corporations, the Tax Justice Networks says, and in return multinational corporations rinsed countries even harder.   The Tax Justice Network is describing these findings as the largest inadvertent real-world testing of corporate tax policy ever conducted.   The OECD data, collected by over 50 governments from over 7,600 multinational corporations, and spanning 6 years, confirms that cutting corporate tax rates did not reduce multinational corporation’s incentive to cheat on tax, and so, did not inversely result in more tax revenue as predicted.   The theory that cutting corporate tax rates can generate more tax revenue (and vice versa), often referred to as the Laffer curve, has been long debunked. Some politicians continue to reference the theory despite the evidence, often on the advice of corporate lobbyists.   The findings from the OECD’s data mark the first time the theory has been demonstrably tested and disproved at such a large global scale, using real-world data provided directly by multinational corporations to tax authorities on the whereabouts of their profits.   The data itself, known as country by country reporting and long advocated for by the Tax Justice Network, only become available in recent years, albeit not without significant omissions, after years of resistance and delays from the OECD.   Liz Nelson, director of advocacy and research at the Tax Justice Network, said:   “Tax is our most powerful tool for choosing the kind of societies we want to live in. Our governments chose to use tax as a tool to make the super-rich and their corporations even richer, thinking this would make our economies stronger. The data shows this had the opposite effect.   Higher levels of extreme wealth, fuelled by ever-growing global tax abuse, have made our economies insecure, households worse off and our planet unstable. Governments now have a chance to choose differently at the UN, to choose to use tax to protect people, economies and planet.”   “People in countries around the world are calling in large majorities on their governments to tax multinational corporations properly. But governments continue to exercise a policy of appeasement on corporate tax. They surrender billions in tax to multinational corporations and sugarcoat this as ‘tax competition’, even though everybody knows appeasing a cheater only encourages them to cheat more.   We now have how data from these governments showing that when they asked multinational corporations to pay less tax, the corporations cheated even more. It’s time governments found the spines their people deserve from their leaders.”   Countries’ tax losses to wealthy individuals hiding their wealth offshore have dropped in comparison to the 2023 edition of the State of Tax Justice, from US$169 billion to US$144.6 billion.   The drop is largely attributed to countries’ beginning in recent years to automatically share information with each other about bank accounts in their local bank’s held by the other’s residents. The automatic exchange, facilitated under the Common Reporting Standard, makes it harder for an individual to hide their wealth from their tax authority simply by moving their finances to a bank in another country.   However, the resulting drop in hidden offshore wealth is far less than some have previously claimed. The majority (63%) of wealth hidden offshore remains unexposed by the Common Reporting Standard and continues to elude tax authorities.   This year’s State of the Tax Justice provides the most detailed evaluation of the impact of the Common Reporting Standard on countries’ individual tax losses to date. While previous editions of the annual report relied on the best estimates globally available at the time on the scale of offshore hidden wealth, this year’s report makes use of recent advances in measuring hidden offshore wealth as well as new research on countries’ implementation of the Common Reporting Standard.   The report applies a new, granular assessment of the impact of the Common Reporting Standard at a country level that considers countries’ different levels of effectiveness with the Standard, recognising that countries’ tax authorities are differently equipped and not all countries are granted equal access to information under the Standard (while many non-OECD countries remain excluded altogether).   The results show that progress has been much more limited than claimed and that the world is far from the end of bank secrecy.   Nonetheless, even the limited progress is proof that automatic exchange of information does work, the Tax Justice Network argues, and can bring about an end to offshore tax evasion – if implemented properly without loopholes and exemptions, and with all countries participating instead of the OECD’s exclusionary approach.   http://taxjustice.net/press/world-losing-half-a-trillion-to-tax-abuse-largely-due-to-8-countries-blocking-un-tax-reform-annual-report-finds/ http://taxjustice.net/reports/taxing-extreme-wealth-what-countries-around-the-world-could-gain-from-progressive-wealth-taxes/ http://taxjustice.net/reports/ http://cesr.org/the-un-tax-convention-terms-of-reference-have-been-approved-whats-next/ http://cesr.org/joint-statement-its-time-for-the-oecd-to-walk-the-talk-on-human-rights/ http://lens.civicus.org/trillions-at-stake-in-quest-for-tax-justice/   Nov. 2024   G20: Leaders must show greater courage and tax the super-rich, write Olivier De Schutter, Special Rapporteur on extreme poverty and human rights and Surya Deva, Special Rapporteur on the right to development.   As the leaders of the 19 member countries plus the African Union and the European Union gather in Rio de Janeiro, Brazil for the G20 Leaders' Summit, UN experts call on G20 leaders to tax the super-rich to fill the gaps in financing the Sustainable Development Goals:   “While we applaud the launch of the Global Alliance Against Hunger and Poverty, translating this pledge into action would require resources. Taxing the world’s billionaires provides an equitable pathway to generate much-needed additional resources to achieve the Sustainable Development Goals. A transfer of just 0.14 percent of global income could allow eradication of poverty by 2030.   Brazil as part of its G20 Presidency had proposed to impose a 2 percent tax on the super-rich (around 3,000 people owning more than US$1 billion in assets), which could generate US$200-250 billion in revenue per year.   However, due to the opposition of a few developed countries, the proposal was put on the backburner and the G20 finance ministers merely decided “to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed”.   With 84 percent of SDG targets off-track, it is high time for G20 leaders to lead by example and mobilise the required resources. There is clear evidence that the world needs innovative sources of financing – additional, adequate and stable source of financing that does not add to the existing debt burdens of developing countries.   States, as part of the Pact for the Future adopted in September 2024, also agreed to explore ‘options for international cooperation on the taxation of high-net-worth individuals in the appropriate forums’.   As the world community gears up towards the 4th International Conference on Financing for Development and States move towards negotiating the UN Framework Convention on International Tax Cooperation, it is critical to adopt a human rights approach to taxation.   Taxation is essentially a human rights issue: who should pay how much tax and how the collected revenue should be spent has a direct bearing on the realisation of all human rights.   Accumulation of wealth by selected individuals is often directly linked to a systematic exploitation of people or the planet: the wealthiest 10 percent of the population emit 75-80 percent of all emissions responsible for the heating of the planet through the assets they own. Taxing the super-rich is an imperative of fairness and global justice, and it is a modest compensation for the damage caused by how assets are fuelling the climate crisis.”   * The final communique out of the G20 Summit includes a commitment from 19 countries, the European Union, and the African Union, to "engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed.".."We look forward to continuing to discuss these issues in the G20 and other relevant forums, counting on the technical inputs of relevant international organizations, academia, and experts."   The meeting took place less than a year after economist Gabriel Zucman, director of the E.U. Tax Observatory, published a report titled A Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals, which informed G20 finance discussions leading up to the summit.   "A minimum tax on billionaires equal to 2% of their wealth would raise $200-$250 billion per year globally from about 3,000 taxpayers; extending the tax to centimillionaires would add $100-$140 billion," said Zucman, a leading international expert on tax avoidance in the report.   The plan introduces an annual tax of 2% on the total net worth of extremely wealthy individuals — not just their annual income. This would include real estate assets, corporate shareholdings and other investments. Zucman has estimated that the top 0.01% of the population pay an effective tax rate of just 0.3% of their wealth. The new levy would apply to 2,800 billionaires globally, who have a combined net worth estimated at some $13.5 trillion, according to the Forbes Richest World's Billionaires List.   Zucman welcomed the G20 statement saying concrete action by the world's governments must follow. "Now is the time to turn words into action and launch an inclusive international negotiation, extending beyond G20 countries, on the reform of the taxation of the superrich," said Zucman.   Quentin Parrinello, policy director at the E.U. Tax Observatory, said that negotiations on the tax proposal "must now extend to a much more inclusive space than the G20.".. "Such reforms don't happen overnight, but time is pressing," said Parrinello. "This agenda is even more important today, with looming wealth concentration fueling inequality and undermining democracy."   Jenny Ricks, general secretary of the Fight Inequality Alliance: "Rhetoric alone will not address systemic inequality. The superrich use their wealth and power to influence policies and shape the outcomes of elections. Leaders like Donald Trump in the U.S. and Javier Milei in Argentina are actively working to derail international cooperation, while politicians around the world fail to oppose the vested interests that continue to benefit from such unequal societies.   We need more equal societies in which the richest no longer hold all the power and wealth. We need to redistribute such concentrated wealth to fund our vital public services and respond to climate change."   Viviana Santiago, executive director of Oxfam Brazil, praised G20 leader President Lula da Silva focus on tackling extreme inequality, poverty and hunger at G20, particularly for rallying action on taxing the super-rich.   The Brazilian government has been the principal backer of the proposed tax on billionaires, along with France, Spain and South Africa. The U.S. Government has opposed the initiative with Treasury Secretary Janet Yellen telling the Wall Street Journal in May that the measure was "something we can't sign on to". China's and India's positions on the new levy are ambiguous. Donald Trump's first term was marked by large tax cuts for high wealth individuals, that he plans to extend further in his second term, his recent re-election was funded and supported by a group of billionaires and their bevy of lobbyists.   http://www.ohchr.org/en/press-releases/2024/11/g20-leaders-must-show-courage-tax-super-rich-rescue-2030-agenda-sustainable http://www.taxobservatory.eu/publication/a-blueprint-for-a-coordinated-minimum-effective-taxation-standard-for-ultra-high-net-worth-individuals http://www.transparency.org/en/blog/global-asset-register-essential-to-combat-financial-secrecy http://www.transparency.org/en/press/open-letter-g20-leaders-anti-corruption-agenda-rio-summit http://www.transparency.org/en/news/g20-beneficial-ownership-transparency-high-level-principles-ten-years-on http://www.icij.org/investigations/ Visit the related web page
	The international financial system is failing to address the catastrophic debt crisis by Olivier De Schutter UN Special Rapporteur on extreme poverty and human rights   The international financial system is failing to address the catastrophic debt crisis that is engulfing developing countries and causing misery for hundreds of millions of people, the UN’s poverty expert said today.   “The debt crisis is not just a fiscal issue; it is a full-blown human rights crisis,” said the UN Special Rapporteur on extreme poverty and human rights, Olivier De Schutter, on the International Day for the Eradication of Poverty.   “In the poorest countries of the world people are struggling to eat, access health services or send their children to school, while their governments shell out billions of dollars to pay back loans to wealthy creditors.   “Making a bad situation worse, countries with the highest levels of debt also tend to be those most vulnerable to climate change, but are being forced to prioritise debt repayments over addressing the severe consequences of the climate crisis.”   The expert warned that rocketing interest rates since the Covid-19 pandemic were sinking countries in the Global South further into debt.   In 2023, a record 54 developing countries allocated 10% or more of government revenue to paying off the interest on their debt, leaving “little room for countries to spend on poverty-busting public services such as education or social protection”. 3.3 billion people live in countries that spend more on interest payments than on either education or health. Interest rates demanded from developing countries are also much higher than those paid by rich countries. African countries borrow money at almost four times the rate paid by the United States, despite the astronomical level of US debt.   “This perverse scenario has been playing out in the Global South for years, accelerating the freefall into poverty seen since the pandemic,” De Schutter said.   “Creditors have responded too little, too late. The G20’s ‘Common Framework’, agreed in 2020 to bring international financing institutions (IFIs), individual states and private lenders together to speed up debt restructuring, is simply not working.”   De Schutter called for immediate debt relief for countries in crisis and urgent reform of the international financial system to align with human rights.   “Banks and hedge funds have become huge players in the world of sovereign debt and should not be exempt from their human rights responsibilities. It is abhorrent that debt repayments to the world’s richest corporations are being paid at the expense of children’s education or healthcare. Governments must introduce legislation to compel private creditors under their jurisdiction to participate in debt relief for low income countries.   “Comprehensive reform of the international financial architecture, as advocated by the recently agreed Pact of the Future, is also needed. The current system within the IFIs, characterised by unequal representation between high and low-income countries, unfavourable lending conditions, and unfair debt restructuring is trapping too many countries in a cycle of poverty.”   The Special Rapporteur lamented the conditions attached to bailout packages from IFIs which, with their demands for austerity measures, sale of state assets and, at times, surcharges already denounced by UN human rights experts, make it near impossible for states to comply with their human rights obligations and lock countries into unsustainable growth patterns that have only worsened poverty and inequality.   “With Pakistan recently agreeing to its 24th bailout from the International Monetary Fund, which hinged on the country accepting what the Prime Minister called ‘conditions beyond imagination’, it is clear that people in poverty will continue to pay the high price of a debt crisis that is not of their making,” the expert said.   “The solution to the debt crisis is neither to stimulate economic growth at all costs, nor to impose austerity policies. It is to cancel or restructure debt, and to focus on public investment, particularly in social protection, that will restore the prospect of long-term prosperity.”   http://www.srpoverty.org/2024/10/17/statement-international-financial-system-not-fit-for-purpose-to-address-catastrophic-debt-crisis-un-poverty-expert/ http://www.srpoverty.org http://www.ohchr.org/en/special-procedures/sr-poverty http://reliefweb.int/report/world/human-cost-public-sector-cuts-africa-april-2025 http://actionaid.org/publications/2025/human-cost-public-cuts-africa http://www.ipsnews.net/2025/01/developing-countries-choked-debt-year-breaking-free/ http://debtjustice.org.uk/press-release/lower-income-country-debt-payments-hit-highest-level-in-30-years http://debtjustice.org.uk/news http://cafod.org.uk/campaign/the-new-debt-crisis http://tinyurl.com/y45jmkdd http://www.eurodad.org/g20_imf_world_bank_fail_debt_crisis http://www.eurodad.org/key_publications_2024 Visit the related web page
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