A FfD4 side event by the Civil Society Financing for Development Mechanism.
International cooperation on mobilizing domestic public resources, particularly through inclusive and effective taxation, remains a cornerstone of the Financing for Development process. The outcome document of the 4th International Conference on Financing for Development (FfD4), the Compromiso de Sevilla, underscored structural challenges in this area, from widespread international tax abuse to global tax standards that often disadvantage Global South countries. At FfD4, which took place from June 30 – July 3 in Sevilla, Spain, the Civil Society Financing for Development Mechanism hosted a side event on this topic entitled, “Walking the Talk on Domestic Public Resources: From FfD4 to the UN Framework Convention on International Tax Cooperation.”
“There is a lack of financing for development in a world in which there is no lack of money. There is no reason why financing cannot be solved: it is a question of political power. Civil society came to Sevilla and asked if the Global North can deliver the money promised: development aid, climate finance, biodiversity finance, and reparations. But they are now slashing aid budgets. Then, we asked if governments can stop the flow of money from the South to the North where debt repayments flow money from the South to creditors in the North. On tax, we are seeing some process. However, increased tax revenues should not be for creditors while leaving public services unfunded; we need to solve these systemic issues.” shared Tove Maria Ryding, Tax Justice Manager at Eurodad at the side event.
Ryding added, “The FfD4 outcome document has important commitments on gender, progressivity, and environment all in relation to tax. But, the FfD4 outcome document is not binding so we need countries, who have now agreed to this language, to take it to UN tax negotiations in August.”
A groundbreaking shift is underway: one month after the conclusion of FfD4, UN Member States will begin negotiating a UN Framework Convention on International Tax Cooperation (UN Tax Convention), alongside two initial protocols. In late 2024, the UN General Assembly adopted Terms of Reference for a new Framework Convention on International Tax Cooperation, along with two early protocols, set to be finalized by the end of 2027. In August, the negotiations will begin in New York.
Dereje Alemayehu, Executive Coordinator of the Global Alliance for Tax Justice (GATJ), set the stage, “The UN Tax Convention negotiations are historic: it brings UN Member States together on an equal footing to develop inclusive and effective global tax rules. At FfD4, we have seen European countries unsuccessfully try to reopen elements already agreed in the Terms of Reference overwhelmingly adopted last year. In August, countries must negotiate in good faith guided by the Terms of Reference.”
Presently, governments in both the Global North and South lose hundreds of billions of USD annually due to cross-border tax abuse by wealthy individuals and multinational corporations. In addition to illicit financial flows, Global South countries often contend with international tax standards developed in forums where they lack equal representation, resulting in rules that have failed to address their priorities and realities. Thanks in large part to the leadership of the Africa Group at the UN, international tax cooperation is entering a new era.
Everlyn Muendo, Policy Officer at Tax Justice Network Africa (TJNA), shared, “African countries have led this process for a UN Tax Convention because we know that it is impossible for us to effectively tax multinational corporations and high net-worth individuals if we do not transform the international tax system. The UN Tax Convention must transform international tax governance to make it democratic and inclusive, ensure a fair allocation of taxing rights, and address tax-related illicit financial flows which cost Africa USD 89 billion annually. It is not corruption that is bleeding the most of our resources, but tax-related illicit financial flows.”
Speakers highlighted the importance of international tax cooperation globally and regionally. Muendo added, “As we look to the UN Tax Convention negotiations, our civil society colleagues in the Global North must continue calling out the blockers in this process. We need international solidarity for this process.”
Nathalie Beghin, Co-Director of INESC and speaking on behalf of Red de Justicia Fiscal de América Latina y el Caribe (RJFALC) and Latindadd, shared the importance of tax cooperation for Latin America and the Caribbean, “At the regional and international levels, the Regional Platform for Tax Cooperation in Latin America and the Caribbean and the UN Tax Convention will help us to push the national reforms needed to stop the loss of billions of dollars in the region. This is not only about technical reforms; it is a moral and political fight. By closing loopholes and adopting fair taxation models, the region can mobilise the resources necessary for our development.”
Highlighting the significance of this moment, Jeannie Manipon, Senior Program Manager at the Asian Peoples’ Movement on Debt and Development (APMDD) and Co-Coordinator of Tax and Fiscal Justice Asia (TAFJA), shared, “Gender biases and colonial legacies are entrenched in our tax systems. But tax systems are part of the solution. Tax reforms must happen at all levels. The overhaul of the international tax architecture through a UN Tax Convention is an urgent necessity to finally transform the international tax architecture to enable governments to deliver on their international human rights obligations and climate commitments.”
As we look from FfD4 to the August UN Tax Convention negotiations, it is clear: tax justice is key to delivering the resources for public services, development, human rights, gender equality, and climate action.
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– Watch the full side event here.
– Read GATJ’s latest publication From Monterrey To Sevilla: International Tax Cooperation in the Financing for Development Conferences here.
– Find the FfD4 outcome document, the Compromiso de Sevilla, here.