Barbados and other jurisdictions in the region are being told that now is the opportune time to push for emancipation from current unfair global tax regimes being led by powerful international bodies.
This advice has come from Chief Executive of the advocacy group Tax Justice Network Alex Cobham, who noted that while there seemed to be some progress towards the development of new global standards that could include developing nations, there was “still a long way to go”.
“We know the OECD [Organisation for Economic Cooperation and Development] itself has been leading opposition but the prize is there in front of us, perhaps over the next two to three years, for countries all around the world to engage in trying to claim back the tax sovereignty, the right to be an effective state and to deliver for their people which this system and bits of this system have stripped away,” said Cobham.
“This is the moment to undo that, to decolonise, if you like, the tax system. And if we miss this chance, I don’t know when it will come again. I guess it is a call to everyone to say ‘what are your policymakers doing, are they engaged, what are they asking for, how much effort are they putting into this?’ because this is a window that won’t stay open for that long,” he cautioned.
Cobham was referring to the vote taken last year at the United Nations (UN) in New York that could see developing countries having more say in global tax rules.
The resolution, which was presented by the African grouping and which is expected to be debated in September at the UN General Assembly, would ultimately pave the way for a new global tax governance body and a UN convention on taxation that would supersede the OECD’s.
As it stands, the global tax policy arena is largely controlled by the France-based OECD which was formed by primarily rich nations including the US and the UK. Located at the OECD is also the global money laundering watchdog the Financial Action Task Force (FATF) that monitors selected jurisdictions in the area of anti-money laundering/combating the financing of terrorism (AML/CFT).
There is also the European Union (EU) which has come up with its own set of tax rules and created a list for what it calls “non-cooperative tax jurisdictions” that does not apply to EU member states.
Cobham argued that the current taxation policies employed by the EU were not working, adding that “it doesn’t create the right effects on those countries that are listed and the wrong countries escape listing”.
“We reckon that six different European member states would have been on that list had they applied it to themselves,” said Cobham, while noting that the International Monetary Fund (IMF) estimated that getting listing by the FATF could cost economies on average 7.6 per cent of GDP in terms of loss investment flows.
Describing the so-called blacklists and greylists as “unaccountable and clearly manipulating”, the economist said the countries that suffer were the ones that “do not have the political power to manipulate it”.
Cobham was speaking during an online discussion on Tuesday, which was organised by noted Caribbean economist Marla Duharan, one of the region’s most ardent advocates against the OECD and EU “lists”.
The online seminar – Tax Blacklists and Propaganda: Defeating the Discrimination and Pro-Poverty Agenda – came on the heels of reports from FATF last Friday that Barbados remained on its watchlist.
FATF noted that while the country has taken steps towards improving anti-money laundering/countering the financing of terrorism regime, work should continue to implement “its action plan to address its strategic deficiencies”.
It called for accurate and up-to-date beneficial ownership information on a timely basis and further pursuit of repatriation of sharing of confiscated assets with other countries.
FATF expressed concern that Barbados had failed to complete its action plan, which expired in April last year and called for the action plan to be completed by June this year “or the FATF will consider next steps if there is insufficient progress”.
The Cayman Islands, Haiti and Jamaica also remain under increased monitoring by the FATF.
Over the past four years, the Government has put several policies and passed new legislation in an effort to comply with the FATF rules, while giving the assurance that work was being done through various working groups to ensure that Bridgetown is taken off that list.
During the discussions on Tuesday, Cobham concluded that anyone who defended the current global tax governance structure were “at best naive or at worst, deeply disingenuous and are really seeking to perpetuate a status quo that we know deepens the injustices rather than ameliorate them”.
He argued that there was currently a risk of policymakers “telling their people ‘wait, we are dealing with it over here. It is really happening’, and then nothing. So I think we must be impatient. We must demand the impossible today”.
Indicating that countries have until 2025 to push for the establishment of the proposed UN convention on taxation and new global tax governance body, Cobham said “the window really is quite short”.
