These are the worst of times, but they can become the best of times, said speaker Dr. Walden Bello, seeking to inspire thousands of progressives who gathered for the World Social Forum (WSF) in Kathmandu on Thursday with the planet under clouds of armed conflict and assaults on democracy. “We have a climate catastrophe facing […]

By Matti Kohonen
LONDON, Feb 15 2024 – In late November, the UN General Assembly passed a landmark resolution signaling a start on working on a UN framework convention on taxation.

This is a testament to decades of work especially by civil society and African states in pushing for a greater role for the United Nations in global tax governance where Global South countries hold a majority.

Rich countries may now boycott it.

Too much is at stake. Over the past decades, global tax norms have mostly been made at the Organisation for Economic Development and Co-Operation (OECD) and have mainly been negotiated between the European countries and the United States.

They have also largely relied on multinational enterprises (MNEs) regulating themselves where intra-firm trade is regulated as if companies were trading with unrelated parties.

These companies are estimated to shift US$950 billion of profits towards tax havens, leading to associated corporate income tax revenue losses of US$200 to US$300 billion.

In Europe, tax abuses have led to accusations of unfair competitive advantage in the European Union. Apple for instance was fined €14.3 billion (US$15.6 billion) for unpaid taxes in Ireland, while offshore leaks in Luxembourg – called LuxLeaks – showed how over 340 large companies had secretive tax rulings reducing their taxable income.

Making matters worse, countries like Ireland and Luxembourg with extremely low corporate taxes had huge influence when the OECD negotiated the global minimum tax agreement, gaining concessions through the European Union position.

This ultimately led to an agreed 15% global minimum tax rate which was very low due to opposition of key European tax havens like Ireland and Malta where corporate taxes are even lower. The US Treasury had tabled a 21% initial proposal, while many in the Global South, academia and civil society advocated for a 25% rate.

But that is not all.

Loopholes introduced into this deal have reduced its effectiveness even further, such as the carve-out where companies with at least some minimal assets and employees in a tax haven can continue to benefit from its favourable tax regime, thereby reducing significantly the impact of the global minimum tax.

Luxembourg is likely a key beneficiary of this carve-out, as companies may end up slightly upsizing the employment and physical assets there to benefit from the favourable tax regime for their global operations.

Some tax havens in the Global South countries as well, like Mauritius and Panama, offer similar loopholes as Luxembourg.

The UN tax convention should resolve these issues. Negotiations held between the Africa Group, Small-Island Developing States, and the group of G77 and China for all Global South countries should provide a more even platform that benefits countries most harmed by tax abuses.

Importantly, setting global tax regimes at the UN would ensure that key issues such as promoting gender equality, human rights and environmental justice will be included in the overall negotiations which are also key to achieve the UN Sustainable Development Goals.

Starkly, these key development and equality priorities which need funding to be achieved are not even mentioned in the OECD-led tax negotiations.

The UN tax convention would also spur the creation of open and public ownership registries of all owners of companies, trusts and other legal entities as the global standard (known as Beneficial Ownership Transparency).

This is crucial to tackle fraud and corruption and uncover those ultimately responsible for human rights and environmental crimes such as illegal fishing, illegal logging and labour abuses as opposed to simply going after middlemen and operators who benefit from these crimes.

Worryingly, the OECD’s Global Forum and the Financial Action Task Force (FATF) – the global money laundering and terrorist financing watchdog – do not promote public beneficial ownership registries as a preferred option, and instead propose the creation of centralised which are closed to everyone including journalists and civil society organisations.

The first intergovernmental tax negotiations at the UN are expected to start in early March, focusing initially on process-related issues such as electing a bureau, agreeing an agenda, and determining how civil society groups, businesses and other stakeholders will participate in the process.

In June or July, we expect to see the substantive issues being raised. That is when rich countries are expected to try to stall and limit the scope of the negotiations and keep power to themselves at the OECD level.

Our hope to end tax abuses by multinational companies and the wealthy now rests on the resolve of the Global South. And for Global North countries to realise this is also in their own interest.

Matti Kohonen is executive director, Financial Transparency Coalition.

IPS UN Bureau

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By Naureen Hossain
UNITED NATIONS, Feb 15 2024 – Inclusive social protections for children would be a positive signifier of social development in a time where 1.4 billion children globally are denied them. A step towards realizing this has been taken through a new monitoring tool on current social protection and child poverty statistics.

The International Labour Organization (ILO), UNICEF, and Save the Children have partnered together to create the Global Child Benefits Tracker. This online platform will globally monitor children’s access to social protection and identify gaps in existing social protections systems in over 180 countries.

On Wednesday, this tool was launched at a side event on universal child benefits (UCBs) during the 62^nd Commission for Social Development (CSoCD62) hosted in New York. One of the prevailing themes for this year was the use of digital transformation to promote inclusive growth and development. In the context of the Sustainable Development Goals, the tracker would go forward to monitoring growth in poverty eradication by calling on governments to implement responsible and appropriate social protection systems for all by 2030.

The platform includes a breakdown of child poverty statistics by country, region, and income bracket. Notably, the percentage of children that currently have access to social protections is higher when compared to the percentage of the country’s population that is covered by benefits and the expenditures on these social protections. The platform also provides data on the percentage of children at risk of or experiencing monetary or multidimensional poverty. The purpose of this platform will be to serve as a knowledge tool for use in designing evidence-based child-sensitive social protections, intended for use by policymakers in government and international development programmes, social protection programmes, and civil society organizations. The tool would facilitate the exchange of best practices and inspire greater investment in child-sensitive social protection.

The platform also includes a community tab, where supplemental material can be shared as designed by experts and practitioners, such as blog posts, podcasts, videos, and links to resources. David Lambert Tumwesigye, the Global Policy & Advocacy Lead, Child Poverty, of Save the Children International, has urged members of government, academia, development partners, and practitioners to contribute to the community tab and expand the broader understanding of child poverty. “We aim to highlight the scale of global child poverty,”  he said.

Disruptions in the global economy, increased costs of living, and the COVID-19 pandemic are cited as some of the factors that have underlined the need for resilient and comprehensive social protections, especially for children at high risk of experiencing poverty. Yet, as was pointed out by speakers at the event, there have been limited investments in social protections for children, despite the general sentiment that these would be imperative. This was described as a “moral, social, and economic catastrophe,” by ILO Director in New York, Cynthia Samuel-Olonjuwon.

At the launch of the International Labour Organization (ILO), UNICEF, and Save the Children’s Global Child Benefits Tracker. Credit: Naureen Hossain/IPS

“Life without social protection inflicts enormous social costs, and they result in squandered and prematurely shortened lives,” she said. “For children, social protection can literally be a lifesaver. It can make the difference between a healthy, happy, and long life or one that is punctuated by ill health, stress, and unrealized potential.”

The data on countries’ current social protections has been compiled through public studies and those conducted by the ILO and UNICEF. It reveals that social protection programmes in low-income countries reach less than 10 percent of their child population, in contrast to high-income countries, where their programmes reach more than 80 percent of their child population. Yet, the global average of children covered by social protection or benefits caps out at 28.1 percent. Although the evidence suggests that low-income countries struggle to provide universal child benefits, child poverty is still a global issue that affects all countries, regardless of their income group.

ILO, UNICEF, and Save the Children have urged policymakers and leaders to take the necessary measures to implement universal child benefits, or at least more inclusive, child-sensitive social protections. This includes building a social protection system that provides benefits to its citizens across the life cycle, from birth to old age, and securing financing for these programmes through increased public investments and mobilizing domestic resources.

A comparison of child benefits in South Africa compared to the region. Credit: Child Benefits Tracker

The Global Child Benefits Tracker may be a step forward in monitoring progress towards social development when considering the progress that remains in achieving the SDGs. While it is still in its early days, the tool may benefit from expanding its coverage to include contributions from actors on the ground. Philip Alston, the former UN Special Rapporteur on Extreme Poverty and Human Rights, suggested that the platform should include qualitative evidence through testimonies to get a clearer sense of the challenges that hinder social protections and how governments have chosen to act.

There will remain challenges to implanting the sort of social protections and benefits that are being called for. There are still gaps in information, as not all countries are featured. At present, there is limited investment in child benefits. It was acknowledged that the fiscal space is a determining factor, and for the low- and middle-income countries in the Global South, this can be even more challenging due to the limitations in their financial state. It is here that solidarity from the international community and support from financing institutions would serve these countries.

Child benefits can be part of the wider social protection systems, and it has been proven that they can positively contribute towards food security and improved access to basic social services, according to UNICEF’s Global Director of Social Policy and Social Protection, Natalia Winder Rossi. Not only can they directly benefit children and their families, but they can also contribute to their communities and local economies.

“The investment is clear, the evidence is clear, but we continue to face challenges in convincing our own policymakers that this is a wide choice,” she said. “I think the Tracker provides some of that progress, to track some of those results… At UNICEF, this is part of our very strong commitment to closing the coverage gap for children. To make sure that we have systems that are strong and inclusive, we must make sure that every child is part of them and receives adequate benefits. But also that systems are adequately responding to crises.”

Visit the Global Child Benefits Tracker here.

IPS UN Bureau Report

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