Thursday, June 23, 2011

UN versus OECD: Not a football match

The International Tax Review reports on an intriguing exchange in Stockholm between the OECD's Jeffrey Owens and the UN Tax Committee's Michael Lennard, both sides apparently stressing their relationship is one of cooperation rather than competition, with one discussant noting: “While there is a lot of debate about what will be the new world order, the OECD versus the UN is not a football match."

Shame really. A football match would be much more fun than endless discussions about how to make the OECD's transfer pricing guidelines fit for purpose, but the reason for the public proclamations lies with recent criticisms coming from TJN and others about the extent to which OECD countries are trying to impose their (largely ineffective) standards on the rest of the world. And their numerically dominant position on the UN Tax Committee does little to allay our fears.

Anyway, while the OECD and UN deliberate on their ideal team - presumably with OECD players dominating the UN front line and mid-field, and omnipresent Jeffrey Owens placed as striker on both sides - (P.S. TJN will happily provide the referee and linesmen), click the link below to watch one of the most intriguing matches of all time.

STOP PRESS Since writing this blog, a colleague in the US sent the following:

Uh, let me see if I got this right. These guys fly all the way to Sweden at taxpayer expense to a biz-sponsored conference with no NGOs present. The retiring OECD tax boss, who has never been known for dodging headlines, denounces unnamed NGOs not present at this obscure conference for headline seeking, and warns that they are somehow threatening the UN-OECD relationship. He is supported by some City tax-busting QC, a football expert. The UN representative, whose own TP subcommittee is dominated by OECD countries, and also knows from football, agrees that it is not a football match. History having been made, they all fly home.

Actually, gents, it IS a football match. OECD:"own goal," first period.

And now for something completely different:

[PPS Thanks to the person who called me last night to point out that Karl Marx was right about the goal being offside!!!]


Anonymous Michael Lennard said...

As the UN person present at the Stockholm meeting (a welcome initiative to have the UN and OECD tax work express their commonalities but also distinct differences), and who was responsible for proposing the valued TJN participation at recent UN meetings, I have remained silent about recent reporting, but feel it is time to say something, purely in my personal capacity. The TJN reporting on these matters has I believe been highly selective on these issues lately and unfairly dismissive of much of the good work being done by those other than TJN; not noting, for example, that there is already vibrant debate in UN tax fora on how to address many of the issues identified in the blog. It has also been inaccurate on key areas. The OECD countries do not have a numerical ascendancy on the UN Tax Committee, as repeatedly claimed, even with Chile recently joining the OECD, and anyone who attended the exceptionally transparent UN Tax Committee Annual Meetings (as TJN representatives have, where they have made interventions) would be aware that some of the strongest criticisms of what might be termed OECD "orthodoxy" have come from the Committee Members from OECD countries. The Members are nominated by countries, but selected on merit by the UN Secretary-General and act in their own capacity, and are chosen to reflect diligence and a balance of experience and regions, so I am not sure about the loss of control you report over the Membership of the Committee from what you seem to perceive as the "good old days". Of course, if the Committee becomes a purely governmental body - a current subject of discussion in the UN, all Members will be countries and they will be chosen in the usual UN fashion, by countries themselves. I for one would be more than comfortable with that. I noted more than once the key role of NGOs in these debates at the Swedish conference, and we have made great pains to ensure NGO involvement in the UN tax work, of course alongside others with a legitimate interest in the system, including business - foreign investment being an important part of most countries' development strategies alongside revenue generation. I believe one of the important results of the Swedish conference was a recognition that the UN and OECD both have key but distinct roles and constituencies in this area (and of course OECD countries are UN Members too), which will sometimes but not always overlap. The UN Tax Committee, with the backdrop of the UN convening power and broad Membership, has been focusing on those areas of real practical difference, with special reference to the positions of developing countries (eg reserving greater taxation rights to host countries of investment as compared with the countries of the investors, and addressing the burdens of complexity that fall disproportionately on developing countries). All of this with a practical orientation that reflects the practical orientation of our wider UN Membership, and a view to increasing developing country voice and participation on these issues - never as easy as it sounds, especially with the very limited budget available. I personally welcome the constructive engagement of TJN and other NGOs in that work (as players, not just as referees or linesmen) and in the current debate on the future of the UN Tax Committee and the vital UN Tax work.

10:44 am  
Blogger TJN said...

The 25 members of the UN Tax Committee were last chosen in 2009. Of the 25 present members of the UN Tax Committee, 12 members are from OECD countries. It is quite strange that of the 192 countries (more or less) in the United Nations, the OECD with 34 member countries (18 percent of 192) has 12 members of the UN Tax Committee (48 percent of 25), and the rest of the world (about 158 countries, which is 83 percent of 192) has only 13 members on the UN Tax Committee (52 percent of 25). This is in spite of the fact that the UN Tax Committee is entrusted with the task of focusing on the special needs of developing countries and countries with economies in transition. Further, from our own observation, it is clear that the OECD members of the UN Tax Committee acted as an organised bloc and in almost all cases are government officials of the OECD countries that nominate them.

7:11 am  
Blogger TJN said...

As a rider to the comment above, readers also need to bear in mind that at the recent (April 26) ECOSOC meeting in New York at which the possible strengthening/transformation of the UN Tax Committee was discussed, the OECD/EU countries were adamantly against any change in the UN Tax Committee. That is, not only does the OECD effectively control the UN Tax Committee, but the OECD does not want the role of the UN Tax Committee enhanced because it would provide more "competition" to the OECD and its Global Forum.

8:18 am  
Blogger marta ruiz-eurodad said...

Let me share here some extracts of a recently released CSO letter addressed to governments ahead of the forthcoming ECOSOC council. This letter has been signed by a large number of CSO representatives and by international NGO networks such as Eurodad, Cidse, and TJN and it calls for the creation of an intergovernmental commission on international cooperation in tax matters, while retaining the UN Committee of Experts on International Cooperation in Tax Matters as a subsidiary body.
“While there is a general need to strengthen and broaden the participation of developing countries in global economic governance, nowhere is such need more justified than in the area of intergovernmental cooperation on tax matters. (…)Without an effective representation of their interests, rhetorical commitments to enhance and strengthen mobilization of domestic resources risk being deprived of any meaning.
(…)Whilst the OECD has considerable expertise, and is able, on occasion, to consult non-members or invite them to meetings – its primary focus and expertise relates to established, industrialised economies. As recently put by an OECD representative speaking at the UN, the OECD does this only in order to seek a broader range of views on decisions that, ultimately, are a matter for its own membership to make.

The challenges and needs of poor economies with respect to taxation are very different and cooperation between developed and poor economies on taxation issues should take place in a more inclusive and representative forum.

The widespread use of the UN Tax Committee’s model tax convention in negotiations, the interest in its practical manual on transfer pricing, and the strong support from developing countries for an intergovernmental Commission on International Cooperation in Tax Matters underlines the effectiveness and representativeness of the UN in the global effort towards greater tax cooperation.

It is therefore essential that funds be found to support these and to finance greater developing country participation in meetings, either from reallocating existing UN funds or from a reprioritisation of resources currently made available to other international bodies, such as the OECD task force and the IMF trust fund.”

5:45 am  

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