The UN75 Global Governance Forum brought together “thousands of leaders worldwide from governments, global civil society, and the technology, business, and philanthropic communities to foster new kinds of innovative partnerships with the United Nations system to better address global peace and security, sustainable development, human rights, and humanitarian action, and climate governance challenges.” I was honoured to present the first ‘partnership initiative’, led by Friedrich-Ebert-Stiftung (New York), on “Good Global Citizens: A Dialogue on Wealth and Responsible Tax Conduct for a Fair Post-Covid Global Economy”.
Our initiative aims to explore “a global campaign to tackle two critical drivers of inequality, hidden wealth and tax evasion and avoidance, as a necessary step to lay the groundwork for a more fair economic system that delivers for people at all income-levels of society.” The participating organisations reflect the broad interest of investors, businesses, the global labour movement, academia, civil society and other experts, and included: Bridging Ventures, Epworth Investment Management, Fair Tax Mark, UN DESA, Friedrich-Ebert-Stiftung, ICRICT, International Monetary Fund, Jawaharlal Nehru University – Centre for Economic Studies and Planning of Social Sciences, Oxfam, Pennon Group PLC, UN Principles for Responsible Investment, Public Services International, Tax Justice Network, Transparency and Accountability International, and UNCTAD.
Here’s the speaking note from my two and half minute slot (also available to view, with bonus virtual background – from about 32 minutes in):
The context for our partnership initiative is this: profit shifting by multinationals exceeds one trillion dollars each year, while the stock of assets held anonymously offshore is estimated at between ten and thirty trillion dollars. These are first-order problems in the global economy. Questions of the responsibilities of both businesses and the state have risen in the public consciousness in recent years, and norms regarding tax abuse and a lack of transparency are shifting, sharply so for younger generations. Advances in data technology allow transparency measures that could make a powerful difference.
In particular, our initiative explored two solutions that would boost public finances, tackle illicit financial flows, combat wealth inequality and enable a fairer playing field for business competition.
Global Corporate Standards for Responsible Tax Conduct
To tackle the corporate tax abuse that causes global revenue losses of $500bn each year, businesses should do the following:
- Embrace public country by country reporting – companies should begin voluntarily to publish this data on their economic activity, profits declared and tax paid in each country, according to either the OECD standard or ideally the Global Reporting Initiative standard (both of which reflect the original proposal from the Tax Justice Network). Major multinationals including Vodafone and Shell have already committed to publish this data, and just last week the multinational Philips announced it would adopt the GRI standard also.
- Publish a binding Policy undertaking not to use tax havens artificially, owned by a named board director.
- Disclose their beneficial owners and persons of significant control
- Pursue independent assurance from outside of the big accountancy firms.
Global Asset Registry
A global asset registry (GAR) would link the existing data provided by recent tax transparency measures, including on the beneficial ownership of companies, trusts and foundations, and provide missing wealth data, which would allow wealth inequality to be measured and understood, facilitate well-informed public and policymaker discussions and support appropriate taxation. A registry would also prove a vital tool against illicit financial flows, by ending impunity for hiding and using the proceeds of crime.
The Independent Commission for the Reform of International Corporate Taxation (ICRICT) launched a UK pilot study in 2019, and this could be replicated across different countries or at regional level based on feasibility or relevance: financial centres holding cross-border wealth, countries that are more capable of establishing some type of an asset register because they have the financial and technological capacity, or countries that are actively considering the introduction of a wealth tax, such as Argentina, Colombia, Peru or South Africa.
The participants in our initiative, including investors, labour unions, civil society and other experts, have committed to continue meeting in exploration and pursuit of these aims, and to engage policymakers around the world on this agenda. We also look forward to the findings of the UN FACTI panel, whose interim report will be published next week, and which is likely to move forward important aspects of this agenda for global policymakers.