John Aiello
ECOSOC Adviser
New York, New York
October 5, 2023
Remarks at a Meeting of the Second Committee on Agenda Items 16 and 17: macroeconomic policy questions and follow-up to and implementation of the outcomes of the International Conferences on Financing for Development
AS DELIVERED
Thank you, Mr. Vice-Chair.
I will focus our remarks on international tax cooperation.
The United States clearly sees the need for international tax cooperation. We have played a leading role in the work of the Global Forum on Tax Transparency and the OECD/G20 Inclusive Framework on BEPS since each processes’ inception.
We thank the Secretary-General for preparing his report on the Promotion of inclusive and effective international tax cooperation at the United Nations.
It is disappointing that report did not fully capture or acknowledge the progress Member States, regional groupings, and civil society have made in advancing inclusive and effective international tax cooperation at the OECD.
The three options set out in the report present potential paths for furthering Member State discussions on this important policy area, but they do not exhaust the options available to the Second Committee or the General Assembly.
Member States should not limit our decision-making and options to the recommendations put forward in the report.
The UN has an important role to play in international tax cooperation so long as that role remains complementary and non-duplicative to existing efforts.
For example, there is a much larger conversation on tax policy in support of the SDGs that the UN could lead without interfering with OECD negotiations.
Tax authority capacity building and domestic resource mobilization are essential to making progress on the SDGs, and different solutions will be needed for different countries. These positive impacts are further amplified when capacity building and domestic resource mobilization activities are guided by an organization that is uniquely equipped with the necessary expertise and resources. These could be areas for UN discussions to focus on. By contrast, focusing on the allocation of corporate income tax would be both duplicative of existing efforts and completely insufficient to achieve the SDGs.
The OECD Inclusive Framework has the best potential to deliver both inclusive and effective outcomes on base erosion and profit shifting. Over 140 jurisdictions are members of the Inclusive Framework. Its consensus-based processes and the OECD Secretariat’s extensive technical support afford every member a real voice in decision-making on an equal basis.
The expertise and inclusivity of the OECD’s processes help the discussion in this delicate policy area move forward constructively and facilitate actual implementation of consensus outcomes.
The OECD’s work has already channeled at least $43 billion in tax revenue to developing countries that would have otherwise gone uncollected and the implementation of the Two Pillar Solution should only accelerate progress. Implementation is expected to raise $220 billion in tax revenue globally per year, with the largest percentage increases in low and middle-income countries.
Simultaneous negotiations on the same issues at different fora under different rules would undermine the ability of parties to achieve meaningful results at either venue. For example, UN negotiations on a global minimum corporate tax rate could easily derail the OECD’s efforts to implement the agreed 15% global minimum rate. Restarting negotiations now would be very costly at a time when urgency is needed and would needlessly risk squandering the real progress already made.
Uncoordinated competition brought on the race to the bottom. We should not recreate self-defeating competition in our efforts to solve that problem. Rather, we should discuss how the UN and OECD can best collaborate in order to maximize the benefits of SDG progress through a two-pronged approach of improving capacity building and domestic resource mobilization (with the expert leadership of the UN) and updating the international tax architecture (assisted by the experience of the OECD’s Inclusive Framework).
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