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A challenge for the new FACTI Panel: to put the interests of the Global South at its heart

February 25th, 2020

 

A new global UN high-level panel on financial accountability, transparency and integrity (FACTI) aimed at helping to realize the SDGs by 2030 will be launched in March 2020. The Financial Transparency Coalition shares the concerns of civil society more broadly, as set out in a letter from the Civil Society Financing for Development Group submitted to the presidents of the UN Economic and Social Council (ECOSOC) and the UN General Assembly (UNGA). The letter advises the Panel to build on existing work conducted by the UN General Assembly, confront head-on the challenges pertaining to addressing both tax avoidance and evasion and embrace the opportunity to expand the scope of the UN’s engagement with the issue of IFFs, including tax-related IFFs above all.

The FACTI panel is organised under the UN’s Economic and Social Council (ECOSOC) and the UN General Assembly. It will be hosted by UN’s Department of Economic and Social Affairs (UN-DESA) and it takes its mandate from the outcome of the 2015 Addis Ababa Financing for Development (FFD) Conference.

The launch of the FACTI panel by these UN agencies represents an opportunity to put the spotlight back onto the role of illicit financial flows (IFFs) in harming developing countries and making it harder to achieve the Sustainable Development Goals.  IFFs deprive poorer countries of an estimated $416 billion in tax revenue every year. This level of potential revenue could be transformative in guaranteeing access to rights and essential services, such as universal healthcare, education or gender equity.

One immediate problem that the FACTI panel needs to address – a problem that permeates all of the international institutional architecture that governs global economic relations – is the representation and influence of the Global South when decisions are made.  At heart, the challenge is to face up to the harm caused by policies, practices and laws that have been established in the Global North, enabling asset stripping of developing country economies by wealthy global elites, and underpinning a growth in IFFs and tax havens in the Global South. As stated by Alvin Mosioma of Tax Justice Network Africa: “Efforts by African countries to address poverty and achieve sustainable development goals will remain a mirage if countries do not stem Illicit financial flows and invest in building equitable tax systems”.

The FACTI panel will be reflecting on global efforts to address transparency in the global financial system looking at money laundering, tax avoidance and profit shifting practices by multinational corporations. As it does so, it must also prioritise recommendations on how to create decision-making structures that are inclusive, accountable and spearheaded by the needs and vision of the Global South. One logical step would be the creation of an inclusive UN Tax Commission, as civil society has repeatedly demanded and which was proposed by the developing country group in the UN last year but opposed by many countries in the Global North.

As set out in the civil society letter to the presidents of UNGA and ECOSOC, the FACTI panel should not dilute focus upon or in any way obstruct the need for progress on confronting IFFs and for political processes that should be led by the UN. So far the Terms of Reference of the Panel do not necessarily guarantee this will be the case, and we urge the Panel to take into account the submission’s recommendations to update the ToR to reflect these fundamental considerations. The Panel can and should be an opportunity to bolster progress, because the United Nations represents the only opportunity to ensure that international standards are set by bodies where all countries affected have an equal voice and participate fully.

 

 

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