Report is a ‘breath of fresh air’ but a more fundamental revision of the international tax architecture is urgently required, says ActionAid
Tax campaigners have given a qualified welcome to today’s OECD report proposing international action to ‘reinforce the integrity of the global tax system’.
Chris Jordan, tax justice campaign manager at ActionAid, said: ‘The OECD study demonstrating how multinational companies game the international tax system is a welcome breath of fresh air. Yet ActionAid are concerned that the solutions proposed will not bring significant benefits for the world’s poorest countries for years to come.’
He added: ‘The OECD correctly identifies that the lack of a level playing field stifles the development of small businesses, which ultimately stunts economic growth and development. However the incremental reforms it recommends offer limited hope to small business in the short term. A more fundamental revision of the international tax architecture is urgently required.’
Jordan cited this week’s ActionAid report alleging that ‘companies like the Associated British Foods (ABF) group use a range of financial engineering to ensure they pay “virtually no corporate tax” in desperately poor countries like Zambia’.
As Tax Journal reported yesterday, the ABF group has mounted a robust defence of its tax arrangements. But it appears that at the end of a 12-month investigation ActionAid and ABF remain at odds on a number of issues.
Jordan stressed that in Zambia, where 45% of children are malnourished and two thirds of the population live on less than $2 a day, ‘ordinary people pay their taxes’.
‘The UK government and other world leaders must now rise to the challenge and consign aggressive tax avoidance to the history books,’ he said. ‘Current international rules are simply not fit for purpose; ActionAid will be pressing the G20 and G8 take decisive action this year to end the scandal of industrial scale tax avoidance.’
Sol Picciotto, emeritus professor at Lancaster University and an advocate of unitary taxation, said the OECD report could lead to ‘a significant rewriting of international tax rules’ for multinationals.
‘I think the report is a game-changer. It maps a way forward for far-reaching and potentially radical changes in the international tax system. Obviously, public opinion, driven by the revelations of investigative journalists and NGO reports, has forced politicians to demand effective action from the OECD technocrats. Now they are promising to deliver, by thinking out of the box,’ he said.
Richard Murphy, director of Tax Research UK, said: ‘The OECD has smelt the coffee and this report reflects the mood of the moment. Applauding newspapers like The Guardian and campaigners alike, it says that unless there is fundamental reform corporation tax on multinational companies will collapse and serious distortions in markets will result.
‘The report does not set out an agenda of changes but it does make clear six key areas where changes are needed. The tone of the report is enough to suggest that mere tinkering on any of them will not be enough this time: the OECD realises fundamental reform is required. That's a massive step forward for tax justice, transparency and fair competition.’
Report is a ‘breath of fresh air’ but a more fundamental revision of the international tax architecture is urgently required, says ActionAid
Tax campaigners have given a qualified welcome to today’s OECD report proposing international action to ‘reinforce the integrity of the global tax system’.
Chris Jordan, tax justice campaign manager at ActionAid, said: ‘The OECD study demonstrating how multinational companies game the international tax system is a welcome breath of fresh air. Yet ActionAid are concerned that the solutions proposed will not bring significant benefits for the world’s poorest countries for years to come.’
He added: ‘The OECD correctly identifies that the lack of a level playing field stifles the development of small businesses, which ultimately stunts economic growth and development. However the incremental reforms it recommends offer limited hope to small business in the short term. A more fundamental revision of the international tax architecture is urgently required.’
Jordan cited this week’s ActionAid report alleging that ‘companies like the Associated British Foods (ABF) group use a range of financial engineering to ensure they pay “virtually no corporate tax” in desperately poor countries like Zambia’.
As Tax Journal reported yesterday, the ABF group has mounted a robust defence of its tax arrangements. But it appears that at the end of a 12-month investigation ActionAid and ABF remain at odds on a number of issues.
Jordan stressed that in Zambia, where 45% of children are malnourished and two thirds of the population live on less than $2 a day, ‘ordinary people pay their taxes’.
‘The UK government and other world leaders must now rise to the challenge and consign aggressive tax avoidance to the history books,’ he said. ‘Current international rules are simply not fit for purpose; ActionAid will be pressing the G20 and G8 take decisive action this year to end the scandal of industrial scale tax avoidance.’
Sol Picciotto, emeritus professor at Lancaster University and an advocate of unitary taxation, said the OECD report could lead to ‘a significant rewriting of international tax rules’ for multinationals.
‘I think the report is a game-changer. It maps a way forward for far-reaching and potentially radical changes in the international tax system. Obviously, public opinion, driven by the revelations of investigative journalists and NGO reports, has forced politicians to demand effective action from the OECD technocrats. Now they are promising to deliver, by thinking out of the box,’ he said.
Richard Murphy, director of Tax Research UK, said: ‘The OECD has smelt the coffee and this report reflects the mood of the moment. Applauding newspapers like The Guardian and campaigners alike, it says that unless there is fundamental reform corporation tax on multinational companies will collapse and serious distortions in markets will result.
‘The report does not set out an agenda of changes but it does make clear six key areas where changes are needed. The tone of the report is enough to suggest that mere tinkering on any of them will not be enough this time: the OECD realises fundamental reform is required. That's a massive step forward for tax justice, transparency and fair competition.’
