Dear Editor,
Earlier today, the US, UK, Canada, EU States and a few developed economies, rejected a proposal at the UN which sought to establish a global intergovernmental approach to bridging the gap between rich and poor, by stopping tax abuse globally. However, the African countries, with strong support from countries in Latin America and the Caribbean, with the exception of Mexico and Peru, successfully piloted the “UN-poor man” resolution. On August 7, 2023 I raised concern in your daily publication, relative to equitable taxation. I attempted to highlight that at the country level, more fiscal allocations were made for roads and bridges than that made by way of appropriation for the fight of crime and strengthening of security across Guyana.
These issues are not new, nor isolated to national issues of concern in Guyana. Over the past decades, the Tax Justice Network advocated relentlessly for a fairer, equitable, inclusive and justice system of taxation globally. Their advocacy was premised on the basis that the OECD rules were unsuitable to reduce the proliferation of tax evasion and avoidance by the very wealthy and multinational corporations. Only recently, Dominica was added to the EU blacklist for noncompliance with the rules set by the OECD. The Tax Justice Network found that the OECD rules contributes to a loss of revenue and a lack of correlation with developmental issues such as crime, climate financing and payment of a living wage in developing countries.
Adding to this, Alicia Nicholls, international trade specialist and research fellow at the Shridath Ramphal Centre at the University of the West Indies, opined that global tax justice would avert loss of nearly $5 trillion to tax havens over the next decade. Similarly, the Tax Justice Net-work estimates that USD$480 million in taxes are lost by countries every year. In the context of Guyana and the Caribbean, withholding tax and corporation tax rates are varying, including zero rated in sister CARICOM State – the Bahamas. In the advent of the single market and free trade arrangement, and double taxation rules, there remains the problem of annual tax loss due to permissible, and sometimes unintended avoidance by multinational corporations operating in Guyana’s oil and gas sector in the absence of a properly constituted petroleum commission.
The IMF since 2008 (see: Corporate Income Tax Competition in the Caribbean by Koffie Nassar) raised concerns about the consequence of varying rates of corporation tax in the Caribbean, as a likely source of tax loss for the Region. Money laundering and the operations of shell corporations are additional means by which revenue loss occurs in the Caribbean. It is for these reasons that the African Union, and countries in the southern hemisphere, advanced the call for global taxation over the past decades. For instance, in July this year, the government of Colombia, in collaboration with the governments of Brazil and Chile, invited the governments of Latin American and Caribbean States, and civil society organisations to draft the first Agenda Call for a Tax Convention at the UN. They were beaten to the punch by the African Union.
Earlier today, an historic vote was had at the UN. By a two-thirds majority (125 to 48), the UN passed a resolution that will pave the way for a more inclusive, fair, equitable and just global tax system that will ensure more tax earnings in developing countries. The more than 60 years dominion exercised by the OECD in setting the boundaries of the global tax rules, is coming to an end.
Sincerely,
Kevin Morgan
