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	Multi-stakeholder governance: a corporate push for a new global governance by David Sogge, Nick Buxton Open Democracy, agencies   Jan. 2016   It’s become an annual tradition. Every year, Oxfam publishes shocking statistics on inequality just days before the global elite gather at the World Economic Forum (WEF) in Davos, Switzerland – an invitation-only event that hedge fund billionaire-philanthropist George Soros once termed a “big cocktail party”.   This year was no different. Indeed, the Oxfam report drives home the fact that inequality is rapidly getting worse. In 2010, the wealth of 388 individuals was equivalent to that of the world’s poorer bottom half; five years later, a mere 62 individuals had the same wealth as the bottom half. The wealth of the richest 62 had risen in that five-year period by 44 percent while the poorer half’s assets had declined in value by 41 percent.   Oxfam concludes, “Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate.”   Corporate chieftains that WEF serves and celebrates undoubtedly benefit from these flows of wealth, in part because they own the machinery that ‘pumps’ it upward. So what does a typical ‘Davos Man’ think about upward redistribution?   On the surface, it would seem they are worried. WEF elite surveys since 2012 have fingered “severe income disparity” as a serious source of risk both for social and political stability and for the expanded purchasing power so vital for the corporate bottom line.   In these surveys of risk perception among WEF’s “communities of leaders”, attention to inequality is sometimes strong, often not. But broadly their views have come to echo recent talk at high levels in the aid-and-development world, notably in the IMF, which has also begun to send off signals that inequality is bad for economic growth.   Remedies? Recycling failed paradigms   The solution to any crisis is more collaboration and “partnerships” with corporations. So what do they propose as a solution? WEF’s recent paper, The Inclusive Growth and Development Report 2015 gives some perspectives. While it sidesteps questions of what drives inequality, the Report does at least accept that “a geographically and ideologically diverse consensus has emerged that a new, or at least significantly improved, model of economic growth and development is required”.   Would that mean consigning today’s neoliberal model, that has created the transfer of wealth upwards to history’s trash-heap? Perhaps it is not a great surprise that the answer is - no, not at all.   Rather, the WEF report pooh-poohs redistribution and skilling-up policies as too narrow in scope. Instead it plumps for globalised growth and business as usual, arguing that it is important not “to miss the fuller opportunity to adapt or ‘structurally adjust’ one’s economy” to global forces as they present themselves.   Beyond the waffle, and references to popular protest about what people “perceive as a distorted and non-inclusive economic and political system”, Davos Man maintains an ironclad faith in technological innovation, entrepreneurship, and corporate-led globalisation.   Moreover, rather than just seeking to sustain the existing system, WEF’s delegates are seeking to entrench it by reducing the role of nation-states in governance, and promoting corporations as new ‘global citizens’.   Entrenching corporate governance   For the WEF, national governments and political systems often get in the way of a globalised future. The solution to any crisis, such as inequality or climate change, is more collaboration and “partnerships” with corporations. For example, the WEF Global Risks Report 2015 holds that multinational companies and consumers should seek “global collaboration in the face of growing pressures to prioritize national economic self-interest”.   Much of these partnerships are proposed in the shape of ‘multi-stakeholder’ platforms, thousands of which exist already addressing issues from forest management to internet name allocation. By far the most ambitious of these is a big plan for running the world, the Global Redesign Initiative.   Nothing so grand has been imagined since the Bolshevik’s dream of a ‘World Socialist Soviet Republic’. By far the most ambitious of these is a big plan for running the world, the Global Redesign Initiative.   Fortunately, a team at Boston University has analysed the initiative and its first blueprints. The team found that if WEF’s planetary governance system were put into motion, it would further blur the lines between corporate and governmental spheres.   Multi-stakeholder governance would mean increasingly replacing legislated ‘hard law’ and policy with normative guidelines (‘soft law’) favoured by corporations. Compliance by corporations would become voluntary; enforcement through penalties, fines and jail terms would be discouraged, (except, of course, where business interests are at stake).   A globally-redesigned, multi-stakeholder world is a free world, corporations can simply decline tasks if they so prefer. Multi-stakeholder governance would therefore be a hit-and-miss affair; just where buck stops, and who must account to citizens, is left vague in this frankly frightening dystopia.   Multi-stakeholder governance is accompanied by a constant push for public-private partnerships (PPPs) as an answer to almost any problem of research, development and investment. At first glance, they are attractive inasmuch as they mobilize private monies where public treasuries allegedly face constraints. But the reality of PPPs going by their track records, is anything but positive for citizens, especially in the long run.   A specialists’ report published by the European Union concluded in 2014: “PPPs are by far the most expensive way to fund projects. Equally important, the cost is often non-transparent and not accountable to auditors, parliaments or civil society groups.   Similarly, debt sustainability assessments do not currently take account of this cost as these are treated as off-budget transactions, and PPPs have also tended to be very high risk financing”. In most cases then, we shouldn’t touch public-private partnerships with a barge pole.   Meanwhile, to demonstrate their social concern, the corporations at WEF emphasise their involvement in voluntary corporate social responsibility codes. But what does CSR actually accomplish, and for whom?   A comprehensive, and damning answer comes from a major three-year research programme funded by the European Commission and involving 17 European business schools and think-tanks that probed the impact of CSR as practiced by more than 5000 Europe-based firms.   The study’s headline conclusion: “The aggregate CSR activities of European companies in the past decade have not made a significant contribution to the achievement of the broader policy goals of the European Union".   Most CSR activities are managed by public relations departments; CSR rarely enters core corporate strategies. As the researchers see it, CSR as practiced today should be consigned to the history bin. Public laws and regulatory measures are far more important if public goals respecting job quality, the environment and the economy are to be achieved.   Further discrepancies between corporate rhetoric and reality have been revealed in research coordinated in the University of Oregon’s Lundquist College of Business. The study compared the effective tax rates paid by a sample of American firms between 2002 and 2011 with a measure of those companies CSR programmes. It found that the companies which bang hardest on the CSR drum also strive the hardest to avoid paying tax. Further, companies with high CSR scores tend to spend the most on lobbying to lower their tax.   In other words, most corporations use CSR as a public relations gimmick and as a substitute for taxes they should be paying. Oxfam’s own research showed that 9 out of 10 of WEF’s corporate partners are registered in tax havens. So much for corporate ‘citizenship’. The companies which bang hardest on the CSR drum also strive the hardest to avoid paying tax.   Apart from having corrupted political life, the most disturbing thing about corporate pressures to lower their taxes is how overwhelmingly successful they have been.   According to a 2015 study by IMF economists, corporations in richer countries are today taxed at rates approaching half of what they paid in 1980. Losses to public treasuries in rich countries have been substantial, while for poorer countries the losses have been massive – an estimated $200 billion per year, equivalent to 1.7 % of their GDPs.   Under pressure from corporations, politicians have made laws (and under-funded tax offices and regulatory watchdogs) that permit corporations and individuals to channel and hide their profits and other assets in low- or no-tax secrecy jurisdictions (e.g. Switzerland, Lichtenstein) and other low-tax offshore financial centres (e.g. Delaware, Ireland, the Netherlands).   So while some have welcomed the fact that the Davos Man is talking about inequality rather than ignoring it, the fact that it is getting worse each year under their governance suggests it is rather short-sighted to believe that the World Economic Forum will ever be a place to look for solutions. Not only does Davos fail to turn its rhetoric on social responsibility into any real practice, it continues to advocate policies that will exacerbate inequality.   Worst of all, they are seeking to build a system of multi-stakeholder governance that will keep power and policies under their control. Real solutions to inequality will, as they have always done, come from movements ‘from below’ demanding redistribution of wealth and power.   http://www.opendemocracy.net/david-sogge-nick-buxton/how-will-davos-man-address-inequality-0 http://www.opendemocracy.net/harris-gleckman/multi-stakeholder-governance-corporate-push-for-new-global-governance Visit the related web page
	Government tax revenues fund essential public services by Magdalena Sepulveda Carmona, John Christensen Tax Justice Network, agencies United Kingdom   Dec 2015   It''s Time for Companies to Lead the Fight Against Tax Dodging, writes Magdalena Sepulveda Carmona, United Nations Special Rapporteur on Extreme Poverty and Human Rights (2008-2014)   Earlier this year, world leaders agreed the new Sustainable Development Goals (SDGs), which aim to tackle poverty and deliver opportunity across the globe.   But changing the world doesn''t come cheap. Ambassador Macharia Kamau of Kenya, one of the co-facilitators UN SDG process, has said implementing them could cost trillions per year.   A very significant amount of money, more than could ever be delivered by aid. Developing countries must be empowered to collect the taxes they need to end poverty.   Critical to this is tackling corporate tax avoidance, which blights the poorest countries in the world. IMF research estimates that developing countries lose over $200 billion a year to big companies dodging tax, leaving key public services like schools and hospitals starved of funding.   In response a coalition of charities - ActionAid, Oxfam and Christian Aid - has developed a new report which offers companies practical suggestions for adopting a more responsible approach to paying tax. They want businesses to seize the initiative and take the lead on the public debate around tax dodging.   Corporate tax avoidance has come to the attention of the UK public via the likes of Amazon, Starbucks and Fiat: big companies which have been caught paying too little tax. Less familiar may be the tax avoidance which is harming some of the poorest people in the world.   People like Caroline Muchanga, a stall holder in Zambia who paid more tax than the British owned multinational Zambia Sugar. While she struggled to buy school books for the children, her corporate neighbour used clever tricks and tax havens to reduce its tax bill to near zero.   Ensuring a fair taxation system requires government-led reform: domestic and international leaders must take the bull by the horns and change the existing rules and institutions governing the international corporate tax system. The current regime is not only obsolete but unfair.   But this is only one part of the solution, and increasingly civil society is mobilizing to demand that companies align their economic interests with those of the public.   The timely publication of the discussion paper ''Getting to Good - Towards Responsible Corporate Tax Behaviour'' by ActionAid, Christian Aid and Oxfam aims to assist business leaders to develop a more responsible approach to taxation. Rather than highlighting what companies should stop doing the paper offers concrete suggestions as to how firms can act more responsibly.   For example, companies can:   Publish country-by-country reports to show how much tax they are paying in every country they operate in. If companies are regularly paying zero tax in particular countries this could point to tax avoiding practices.   Publish the outcome of any significant deals that they reach with tax and revenue authorities. This would shine the light of transparency on what are currently private dealings.   Assess and begin to address the human rights impacts of their tax behaviour. By depriving developing world governments of revenue, so too might companies be depriving them of the ability to provide fundamental rights such as education.   Regularly audit their use of tax incentives and reliefs to ensure they are delivering investment, employment or other benefits to developing countries. If companies are getting tax breaks there should be a net benefit to the country they are operating in.   Perhaps more significantly the report suggests the need for a change of culture within multinationals, towards an acceptance that they can go above and beyond being legally compliant on tax.   Fundamental issues of fairness are at stake. Around the world, there is an increasing awareness that the existing corporate tax system is feeding historic levels of inequality, impeding the fulfillment of human rights, tearing the fabric of societies and endangering future economic growth. The stakes could not be higher - achieving the ambitious SDGs requires large corporations to contribute their fair share.   Tax avoidance is now scarcely out of the news, and many companies have faced huge reputational damage for playing fast and loose with the rules. Alongside the urgent reforms to regulation that are required, good businesses should recognise that they too must play their part. The world expects nothing less from corporations and their leaders.   http://actionaid.org/news/tax-treaties-stopping-poor-countries-collecting-fair-share-tax-multinationals http://www.ms.dk/sites/default/files/filarkiv/dokumenter/a_hrc_26_28_eng.pdf http://www.ohchr.org/EN/Issues/Poverty/Pages/Fiscalandtaxpolicy2014.aspx http://www.ohchr.org/EN/Issues/Poverty/Pages/AnnualReports.aspx http://www.ohchr.org/EN/Issues/Poverty/Pages/SRExtremePovertyIndex.aspx   14 Dec. 2015   (Below is an extract from a lecture that John Christensen, Director of the Tax Justice Network (TJN), gave at the Max Planck Institute in Cologne this week. Government tax revenue funds the provision of public services such as schools and hospitals).   Today’s edition of The Guardian newspaper carries an article about the very issue I plan to address today. The British Channel Island of Jersey – where I grew up – was an early adopter of a development model based on the state working with international financial capital to create a “competitive” regulatory and tax environment.   In the 1970s Jersey rapidly transformed itself into an offshore tax haven satellite of the City of London. Within a decade the tax haven activity had crowded out the island’s pre-existing industries (tourism, light manufacturing and horticulture). By the 1990s the island was perilously over-dependent on its offshore financial centre role, and the state had become captive to the dictates of the finance nexus: Jersey had succumbed to the phenomenon of the Finance Curse.   As the Guardian points out, however, what applies to Jersey arguably applies also to Britain — which poses a far greater threat to global economic and social stability. Britain’s commitment to a “competitive” development strategy, sounds ominously similar to what has brought the island of Jersey to its downfall.   There is an urgent need to shift the academic discussion of state “competitiveness” into the wider arena of public debate. TJN has a role to play in this process, and our recent publications on tax competitiveness and the Finance Curse are the core of my talk today.   Tax competition is back in the frame:   Evidence is mounting that lobbying pressure to grant tax holidays, accelerated depreciation rates, preferential treatments, export processing zones, and other incentives to investors in Africa is driving effective tax rates down to near zero, with subsidies in some sectors taking the effective rate into negative territory.   In Europe the advanced tax agreements negotiated by PWC with the Luxembourg government are under challenge on the basis that they constitute illegal state aid which harms competition within the single market.   Inter-state tax competition has increased steadily in the United States, with a huge variety of economic subsidies being available at state, county and city level. Specialised ‘location’ consultants act on behalf of businesses to pressure state and city authorities to maximise subsidies and tax breaks for their clients.   Republican candidates for the US presidential elections in 2016 are calling for complete abolition of the Corporate Income Tax (CIT) on the grounds that the U.S. needs to ‘compete’, and most are committed to abolishing FATCA, a cross-border information-sharing mechanism.   In the United Kingdom, prime minister David Cameron is committed to Britain leading the global race to the bottom on tax, and to pushing for radical reform of the EU to increase state ‘competitiveness’.   The Tax Justice Network and transparency   Since launching TJN in 2003 we have largely concentrated our research and advocacy effort on strengthening international transparency measures. The rationale behind this focus was based on our view that improved information exchange can significantly strengthen national attempts to tackle tax evasion by owners of offshore portfolio capital, while a new accounting standard for country by country reporting by multinational companies will help tax authorities identify when profit-shifting is occurring.   In 2004 we put out a call for a new global accounting standard for multinational companies which we called country by country reporting (CBCR). Initially our proposal was rejected as impractical and expensive. More recently Multi-National Corporations (MNCs) have tried to block CBCR on the basis that the tax information it disclosed is commercially confidential. CBCR is now being developed as a global standard by the OECD, and last week the French National Assembly rejected strong MNC lobbying and voted in favour of public reporting.   In 2005 we called for rejection of the OECD’s impractical standard for information exchange between countries on a by request model and proposed instead a multilateral standard for automatic information exchange (AIE). For 7 years our demand was blocked by governments of tax havens, but in 2012, with support from the Indian government, AIE was agreed as the new global standard by the G20. The OECD is currently developing a Common Reporting Standard for automatic information exchange.   In 2005 we also called for new public registries of the beneficial ownership of companies as a means of tracking corrupt transactions hidden behind secretive offshore shell companies. In 2013 G20 committed to taking action on this front as well.   Clearly significant progress is being made – albeit slowly and in the face of strong resistance – towards a degree of greater transparency of the global financial markets.   However, this does not mean that we are necessarily rolling back the problem of taxing and regulating capital in an era of near perfect capital mobility.   The problem of taxing capital   For several years, and particularly since our campaign of naming and shaming prominent tax avoiders forced governments to at the very least appear to be taking action, MNCs and wealthy people have been fighting back against efforts to tackle tax evasion and avoidance.   With public opinion in most countries strongly against tax dodging, they have opted to use their immense lobbying strength to:   (i) Resist pressure for stronger international cooperation on tax information exchange   (ii) Deepen political commitment to tax competition   In practice it seems increasingly clear that the ultimate goal is the complete abolition of the corporate income tax (which, by the way, several Republican candidates for the US presidency have signed up to).   Their political strategy is to target key political allies in countries like Britain and the USA, and to degrade the CIT to the point where it becomes politically viable to call for its abandonment. In response we have issued a report on why keeping the CIT is crucial to maintaining a balanced and equitable tax regime.   But the political rhetoric in favour of tax and regulatory competition has increased significantly in the past three years, and that is the subject I aim to address today.   Tax competition has been on TJN’s agenda since our launch in 2003, and some of our regional chapters have given this priority over global transparency initiatives.   TJN Africa, for example, has been addressing regional tax competition in eastern Africa, and more recently western Africa, challenging governments over the incentives they offer to MNCs wanting access to their markets or their resources. In almost all cases these tax incentives serve no useful purpose whatsoever.   At country level our colleagues in Kenya have challenged that country’s government over its double tax treaty arrangements with the tax haven of Mauritius, which make far too many concessions on the taxing of investment routed via Mauritius.   Britain: leading the race to the bottom   I want to focus on Britain, where successive governments have put tax competition at the heart of economic development strategy. Both the government and its opposition have stated their intention of making Britain the most tax competitive nation in the OECD. Prime Minister David Cameron has used the hashtag #global race to signal the importance he attaches to the Competitiveness Agenda, and when he talks about boosting Europe’s ‘competitiveness’ he is actually offering a radically different model to the cooperative ideal of the EU’s founders.   A clear choice is now being proffered between the welfare state on the one hand and the competitive state on the other. Cameron’s strategy is to use race to the bottom tactics to undermine the former and reinforce the latter.   In the past decade the nominal UK corporate income tax rate has been reduced from 30 percent to 18 percent. But for many MNCs the effective tax rate is in single figures, partly due to relaxation of Controlled Foreign Corporation rules and the introduction of a patent box provision, which encourages MNCs to locate royalty payments in the UK. What is extraordinary about this provision is that HM Treasury has conceded that the patent box tax break will allow MNCs to reduce their tax payments by many billions annually without ever paying for itself at any time in the foreseeable future.   Why would any responsible government want to adopt such a tax policy? I fear the answer lies not in the realms of economics – this is clearly not efficient in any meaningful sense of that term [and there is no evidence that the patent box will actually incentivise any research into innovation.]   Rather, this extraordinary political concession to capital has been made because the political processes in Britain have succumbed to the political economic phenomenon known as the Finance Curse.   Fiscal policy in Britain, especially relating to corporate tax and corporate subsidies, is now largely controlled by MNC lobbies, with major accounting firms acting as close advisers to both government and opposition. To exemplify the extent to which control has been passed to Capital, in 2010 the incoming coalition government appointed a committee almost entirely consisting of MNC representatives to review UK tax policies relating to corporate taxation.   Unsurprisingly the MNCs – like a bunch of children let loose in a cake shop – grabbed whatever they could take, including relaxed CFC rules, patent boxes, and lower tax rates.   Has this resulted in increased investment or innovation or productivity? None of those objectives have been achieved.   Britain finds itself in the perverse situation of apparently receiving significantly less revenue from the CIT than it pays out in direct and indirect subsidies to the corporate sector.   Estimates from Kevin Farnsworth at Sheffield University highlights the general direction of travel of capitalism in the current era; the ability to free ride, and to extract state subsidy is taking us in the direction of the corporate welfare state.   http://www.taxjustice.net/2015/12/14/the-finance-curse-and-competitiveness-presentation-at-max-planck-institute/ http://www.equalitytrust.org.uk/ http://www.nybooks.com/articles/2016/01/14/parking-the-big-money/ http://business-humanrights.org/en/its-time-for-companies-to-bring-tax-into-their-human-rights-due-diligence http://business-humanrights.org/en/tax-avoidance-0 http://www.taxjustice.net/2015/03/18/new-report-ten-reasons-to-defend-the-corporate-income-tax/ http://www.taxjustice.net/blog/ Visit the related web page
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