Guest Post: Mary Cosgrove on ‘Corporate Tax: Fairness, Responsibility and Leadership’

I am very pleased to welcome this guest post from Mary Cosgrove on the Irish Government’s recent multi-stakeholder event on corporate tax. Mary is a lecturer in tax and accountancy at NUI Galway and a PhD candidate at the Irish Centre for Human Rights. You can follow her on twitter @MaryCosg

Once the preserve of technical specialists, tax has increasingly found its way into human rights discourse – in some cases by the explicit linking of the two, in others more indirectly by noting the links between tax revenues and public services, poverty reduction and good governance.  Tax avoidance, tax evasion and tax policies that reduce the tax take of a state all impact adversely on the fulfilment of human rights. The complexity and mobility of multinational enterprises makes corporate tax a key element of the tax and human rights discussion, particularly in relation to poorer countries that are most dependent on corporate tax receipts and suffer disproportionately from harmful tax practices. A conference on Corporate Tax: fairness, responsibility and leadership held in Dublin on February 16th considered these issues and the role of Ireland, international bodies, business and civil society in tax reform.

Contrasting views of Ireland were presented. The first, reflected in the addresses of the Taoiseach Enda Kenny, Minister Michael Noonan, Minister of State Joe McHugh and Eamonn O’Dea (of the Revenue Commissioners) described a country that is a leading the way in tax reform and transparency initiatives and has a commitment to assisting developing countries. The other image, found in the addresses of Minister Katherine Zappone and Sorley McCaughey of Christian Aid, reflected a country with reputation as a tax haven, where policy choices which have lead to high levels of child poverty and homelessness and a with disconnect between tax and social policy. The extent to which Ireland is a leader in tax reform and transparency, or not, is linked to perceptions of the OECD.

Described by Minister Noonan as the “internationally recognised thought leaders on tax”, the OECD (with G20 countries) has introduced an international tax reform project, BEPS [1] and an initiative to increase the automatic exchange of information (AEOI) between tax authorities. Monica Bhatia of the OECD outlined the ways in which these projects included developing countries. However, the claims that they are “inclusive” were challenged by Michael Lennard of the UN’s Financing for Development office. Noting the limited input of poor countries into the BEPS and AEOI design, he likened their participation at the implementation was reinforced by Logan Wort of the African Tax Administration Forum who explained that the tax priorities of the OECD are not the same as the priorities in African nations. However, efforts by the G77 [2] to create a global tax body by upgrading the UN tax committee to an intergovernmental body have been resisted by developed countries, including Ireland.

Professor Sheila Killian of University of Limerick explained that NGOs and the general public have joined in the tax policy game and warned that governments, tax specialists and large businesses who ignored these new players risk being left behind. Jane McCormick of KPMG International spoke of initiatives to common ground between the different parties and Sorley McCaughey suggested that ethical businesses could choose to fulfil their human rights obligations rather than seek mere technical compliance with tax rules. One company to adopt such an approach is SSE plc, the first FTSE100 company to obtain “Fair Tax” certification. Their head of tax, Martin McEwen, explained that their shareholders had no concerns about the impact of recent tax reform as SSE was already going beyond the new standards. Paul Monaghan of the Fair Tax mark, drawing on his experience in other certification schemes, concluded that tax isn’t as complicated as we are lead to believe.

Despite a surprising level of consensus among the speakers, there were still many areas of dispute. While the richer countries ask for time to assess the impact of BEPS and AEOI, civil society continues to call for greater transparency in tax matters and the G77 campaign for fairer treatment of developing countries. A number of participants expressed the hope that the conference was the start of stakeholder engagement on tax, rather than a one off event. The announcements that NGOs will be invited to the Ireland’s pre-budget “national economic dialogue” and that Ireland is to become a partner in the Addis Tax Initiative (which would require them to double their support to tax capacity building in developing nations) suggest that the Irish government are committed to facilitating future engagement on tax. If they are willing to allow human rights to inform tax policy we should avoid the vista Minister Zappone warned of where social infrastructure crumbles around “office blocks built for stateless corporate elites”

[1] BEPS stands for base erosion and profit shifting. The project has resulted international cooperation to shut down many tax avoidance schemes. The project was initiated at the request of the G20 and is currently in its implementation phase.

[2] Group of 77 poorest countries.

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