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A Defeat for International Tax Cooperation

NEW YORK – Most of the world’s governments – eager to mobilize more tax revenues to finance development and curb pervasive tax-avoidance schemes, such as those revealed in the so-called Luxembourg Leaks scandal last year – have an interest in collaborating on taxation matters. Yet at the Third International Conference on Financing for Development, held in Addis Ababa last month, the momentum toward strengthening international tax cooperation came to an abrupt halt.

Developed countries blocked a proposal at the conference to establish an intergovernmental tax body within the United Nations to replace the current UN Committee of Experts. These countries insist that tax cooperation should take place exclusively under the leadership of the OECD, a body that they control.

The rest of the world should hope this will prove to be a pause rather than an end to progress on international tax cooperation, which began 13 years ago, at the first International Conference on Financing for Development in Monterrey, Mexico. Two years later, in 2004, the United Nations Economic and Social Council (ECOSOC) upgraded its “ad hoc group” of tax experts to a regular committee. This meant that the experts would meet regularly and have an expanded mandate that went beyond merely updating a model double-taxation treaty.

Four years later, at the Second Conference on Financing for Development, in Doha, Qatar, policymakers acknowledged that more needed to be done in tax matters, and asked ECOSOC to consider strengthening institutional arrangements. And then, in the year leading up to the Addis Ababa conference, the UN Secretary-General endorsed the need for “an intergovernmental committee on tax cooperation, under the auspices of the United Nations.”