The African Group at the United Nations recently called for the negotiation of an international tax convention to prevent avoidance and boost urgently needed revenues. Latin American countries should likewise support a UN-led process to create more comprehensive and equitable rules that reflect the interests of developing economies.
BOGOTÁ – As one of the world’s most unequal regions, Latin America is desperately in need of additional revenues if it is to solve its knotty economic, social, and environmental problems. But tax collection in Latin American and Caribbean (LAC) countries is low, averaging 21.7% of GDP in 2021, compared to 34.1% for OECD members. What accounts for this gap, and what should be done to close it?
Regionally, the overall lack of progressive taxation certainly plays a role. But the international tax architecture is also to blame. All too often, multinational corporations and the wealthiest in our societies can exploit the rules to avoid paying. The unfairness baked into the current system not only reflects and reproduces inequalities, but also fuels demagogic discourse and undermines faith in the rule of law.
Many of the rules that form the basis of the international tax system were drawn up a century ago by wealthy countries. No surprise, then, that these countries – and their richest citizens – benefit the most from the current framework. That is why the African Group at the United Nations tabled a resolution in October calling for a new round of negotiations on international tax cooperation.
BOGOTÁ – As one of the world’s most unequal regions, Latin America is desperately in need of additional revenues if it is to solve its knotty economic, social, and environmental problems. But tax collection in Latin American and Caribbean (LAC) countries is low, averaging 21.7% of GDP in 2021, compared to 34.1% for OECD members. What accounts for this gap, and what should be done to close it?
Regionally, the overall lack of progressive taxation certainly plays a role. But the international tax architecture is also to blame. All too often, multinational corporations and the wealthiest in our societies can exploit the rules to avoid paying. The unfairness baked into the current system not only reflects and reproduces inequalities, but also fuels demagogic discourse and undermines faith in the rule of law.
Many of the rules that form the basis of the international tax system were drawn up a century ago by wealthy countries. No surprise, then, that these countries – and their richest citizens – benefit the most from the current framework. That is why the African Group at the United Nations tabled a resolution in October calling for a new round of negotiations on international tax cooperation.