New push for global tax justice

Since Monday, members of the United Nations have been discussing a new international tax regime. In view of the debt crisis affecting many countries in the Global South, the talks are considered historic. ‘It's about securing fair tax rights, stopping illegal financial flows and ensuring that multinational companies and wealthy individuals pay their fair share,’ said Jeannie Manipon of the Global Alliance for Tax Justice initiative at the start of the talks.

Following Donald Trump's return to the White House, the US government withdrew from the international tax agreement of the OECD countries. The OECD, the leading organisation of Western industrialised countries, coordinates their economic, trade and development policies. The tax agreement had been agreed after years of negotiations and provided for global minimum taxation of companies and measures against tax avoidance.

There was plenty of criticism of the OECD agreement: It favours rich countries, as taxes would mainly be levied at the headquarters of corporations, criticises the Global Alliance for Tax Justice. In addition, it requires a physical presence of companies, which offers numerous loopholes for digital service providers such as Google, Meta and AI companies.

USA still not participating

The USA is also not participating in the UN consultations that are now beginning. ‘The goals of a future UN framework agreement on international tax cooperation are not consistent with US priorities,’ Jonathan Shrier, deputy US representative to the United Nations Economic and Social Council, said back in February.

The absence of the US could be an opportunity, says Séverine Picard, founding director of Progressive Policies. The consulting firm coordinates a network of over 80 trade unions worldwide that campaign for tax justice. ‘It allows other delegations to debate more constructively and achieve more ambitious results,’ the expert told ‘nd.’ Picard has been involved in international tax negotiations for seven years. Without an agreement between the US and Europe, nothing has progressed at the OECD.

Now it is becoming apparent that EU countries will have to find new partners outside the US. Against this backdrop, trade unions want to influence the current UN consultations. ‘The negotiations are a historic opportunity to end the injustice of a global tax system that disadvantages workers,’ said Luc Triangle, General Secretary of the International Trade Union Confederation (ITUC).

The ITUC, together with the global services union Public Services International and Progressive Policies, has organised talks with UN delegates for Wednesday. Representatives of the Federal Ministry of Finance led by Lars Klingbeil (SPD) will also take part.

Exposing tax avoidance

‘We want to create direct channels of communication between trade union representatives from the Global South and delegates from the Global North,’ explains Picard. ‘The aim is to highlight the consequences of tax avoidance by multinational companies for workers.’ Low tax revenues lead to less public investment, poorer working conditions and job losses in poorer countries.

The trade unions are pursuing three key objectives. Firstly, corporate taxes should be levied where value is created and work is done – not at the company's headquarters. Economic activities such as invoicing should be sufficient as a basis for taxation, rather than physical presence. App-based companies such as Uber are currently exempt from international tax rules.

Secondly, the trade unions want arbitration proceedings to be regulated exclusively between states. Current plans provide for arbitration between corporations and states in UN negotiations as well. ‘Many trade unions have had bad experiences with such procedures in international trade because private companies are extremely powerful,’ explains Picard. Thirdly, the trade unions are calling for more transparency in corporate profits and tax payments. This is particularly important for wage negotiations.

The negotiations will continue until 2027, and the trade unions face a number of hurdles along the way. Following the withdrawal of the Trump administration, it is unclear how the negotiations will be financed. It also remains questionable whether the US will accept an agreement that it did not help to negotiate, especially given that the country is home to the world's largest tech companies.

A German version of the article was first published in the newspaper nd.Der Tag (Si apre in una nuova finestra)