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Top Economists and Global Finance Ministers Launch Declaration Calling for International Corporate Tax Reform

Today, the Independent Commission for the Reform of International Corporate Taxation (ICRICT) launched a global declaration

04 June 2015

José Antonio Ocampo, Joseph Stiglitz, Magdalena Sepúlveda, Eva Joly of ICRICT Independent Commission Urge World Leaders to Fix Broken System

ICRICT Panel to Discuss Declaration at Trento Festival of Economics on June 2 at 5pm CET

Trento, Italy – Today, the Independent Commission for the Reform of International Corporate Taxation (ICRICT) launched a global declaration calling for an overhaul of the outdated international corporate tax system and demanding broad, sweeping changes in the current rules and governing institutions. The declaration will be discussed later today by a panel of ICRICT commissioners at the Trento Festival of Economics in Trento, Italy beginning at 5pm CET.

“Multinational corporations act and therefore should be taxed as single and unified firms – It is time for our leaders to be bold and recognize the legal fiction of the separate entity principle,” said Joseph Stiglitz, professor and Nobel Prize winning economist. “During the transition, leading developed nations should impose a global minimum corporate tax rate to stop the race to the bottom.”

“This debate centers on equity: equity between good taxpayers and bad taxpayers, equity between capital and labor, equity between the rich and those living in poverty, as well as equity between countries, including between developed and developing countries,” said ICRICT chair José Antonio Ocampo, former United Nations under-secretary general and former minister of finance of Colombia. “International corporate tax reforms should be considered from a global public interest perspective rather than national or corporate advantage.”

The declaration argues that the current system is obsolete and ineffective in preventing tax abuse by multinational corporations and urges all world leaders to be bold in their reform or risk escalation of the already fierce public discontent over corporate tax scandals.

Some key points are:

• Tax abuse by multinational corporations increases the tax burden on other taxpayers, violates the corporations’ civic obligations, robs developed and developing countries of critical resources to fight poverty and fund public services, exacerbates income inequality and increases developing country reliance on foreign assistance.

• The current reform efforts of the G20/OECD Base Erosion and Profit Shifting initiative are a step in the right direction but are fundamentally inadequate because in this context the decision-making power is not globally representative.

• The primary enabler of international corporate tax abuse is the separate entity principle—a legal fiction that enables the flow of vast amounts of taxable income away from the underlying business operations.

The declaration recommends that all countries:

• Tax multinationals as single firms with developed countries imposing a minimum corporate income tax rate during the transition
• Curb tax competition to prevent a race to the bottom
• Increase public transparency of taxes paid by multinationals
• Build inclusivity into international tax cooperation by establishing an intergovernmental tax body within the United Nations and begin drafting a UN convention to combat abusive tax practices

See full list of ICRICT commissioners here.

 

About ICRICT
The Independent Commission for the Reform of International Corporate Taxation aims to promote the international corporate tax reform debate through a wider and more inclusive discussion of international tax rules than is possible through any other existing forum; to consider reforms from a perspective of public interest rather than national advantage; and to seek fair, effective and sustainable tax solutions for development. ICRICT has been established by a broad coalition of civil society and labor organizations including Action Aid, Alliance-Sud, CCFD-Terre Solidaire, Christian Aid, the Council for Global Unions, the Global Alliance for Tax Justice, Oxfam, Public Services International, Tax Justice Network and the World Council of Churches.