More than 150 participants from the 65 partner countries, development partners, and supporting organisations of the Addis Tax Initiative (ATI) convened at the first 2022 ATI General Assembly held virtually on 23 and 24 March 2022. High-level policymakers, tax practitioners, development cooperation experts, researchers, and academics gathered at the two-days event to discuss the themes of "taking stock and fortifying political commitment on DRM" and "working together towards the implementation of the ATI Declaration 2025".
Opening the event, Antti KARHUNEN, Director for “Sustainable Finance, Investment and Jobs; Economy that works for the People” of the Directorate-General for International Partnerships at the European Commission, underlined the relevance of the ATI General Assembly which came amidst continued uncertainties caused by the COVID-19 pandemic and the recent crisis caused by the Russian attack on Ukraine. To attend to the consequent heightened need for increased DRM, the ATI has continues to play an essential role in DRM matters by serving as an inclusive platform for agenda setting, peer-learning, donor coordination, and giving voice to the needs of developing countries. In line with the ATI commitments and the urgency to put sustainable and equitable DRM at the heart of a speedy COVID-19 recovery, Mr Karhunen stated the European Union’s recent ATI endorsement of the ATI Declaration 2025.
In his keynote address, Navid HANIF, Director of the Financing for Sustainable Development Office at the Department of Economic and Social Affairs of the United Nations (UN DESA), further reflected on the challenges posed by the pandemic, such as aggravated inequalities, food insecurity and debt vulnerability, and the importance of ATI's work to fill the financing gaps of developing countries. Mr. Hanif focused on the role of fair and effective tax systems for a socially just COVID-19 recovery. To that end, he identified three broad areas for action: “tackling tax evasion and aggressive tax avoidance, money laundering and illicit financial flows (IFFs)”, “taxing the digitalised and globalised economy”, and “strengthening support for capacity building toward the SDGs" as three broad areas of action. He stressed the role of UN DESA as an ATI supporting organisation as a positive development.
In December 2021, the ATI published the 2019 ATI Monitoring Report which documented the progress made by its members vis-à-vis the three original ATI commitments. The Report showed that progress has been achieved with further efforts needed to fully realise the targets set by the commitments. Steven ROZNER, Senior Advisor at the United States Agency for International Development (USAID) and ATI Co-Chair, presented the report and highlighted key findings as follows: ATI development partners have more than doubled their ODA commitments for DRM, while ODA disbursements increased by 69% since 2015. Further, ATI partner countries’ effort to step up DRM presented positive progress in 2019. The average tax-to-GDP ratio increased from 15.43% in 2018 and 14.7% in 2015/6 to 15.47% in 2019, while the share of goods and services taxes showed a decline. Moreover, ATI member countries continued to make progress towards fostering policy coherence in the area of combatting IFFs, double taxation agreements (DTAs), transparency and exchange of information, and DRM for green growth.
The first day of the 2022 General Assembly featured a spotlight session where ATI members presented their recent efforts towards enhancing DRM and promoting policy reforms. Partner countries, development partners as well as supporting organisations took the opportunity to present success stories and share experiences. Vegard HOLMEDAHL, Advisor at the Secretariat of the OECD’s Forum on Tax Administration (FTA), presented FTA’s capacity building and other initiatives on digitalisation and digital transformation assembled under tax Administration (TA) 3.0. Lilian Raquel Roman Florencio, Technical Advisor at the Under-Secretariat of State for Taxation in Paraguay, discussed tax reform measures aimed at enhancing the fairness, equity, and simplicity of the tax system in Paraguay. Ibrahim ALUBALA, Head of Advocacy, Program Development and Quality at Save the Children Kenya, and Ricardo BARRIENTOS, Senior Economist at the Central American Institute of Fiscal Studies, shared experience from projects implemented jointly. In Kenya, Save the Children collaborated with sub-national Child Rights Networks and local business communities and supported legal reform for fair and accountable DRM. While in Guatemala, the Observatory of the Public Investment in Children and Adolescents was formed to provide technical information on how tax revenue is translated into public finance for the needs of children.
Furthermore, Silvia KARELOVÁ, Head of the International Taxation Methodology Unit at the Ministry of Finance of the Slovak Republic, discussed Slovakia’s role in the enforcement of transfer pricing rules in North Macedonia together with the successful establishment of a specialised transfer pricing unit in the latter’s Public Revenue Office. Abdul Muheet CHOWDHARY, Senior Program Officer at the South Centre, shared DRM lessons learned from transfer pricing disputes submitted under the mutual agreement procedure (MAP), while Tommy CARLSSON, Project Manager at the Swedish Tax Agency, shared programme implementation challenges faced by the Agency due to the Covid-19 pandemic. A Tax Justice Network Africa program on the African Parliamentary Network for IFFs and taxation was presented by Chenai MUKUMBA, Research and Advocacy Manager at TJNA, and received significant interest from participants. The flagship program aimed at engaging parliamentarians to step up the fight against IFFs and tax justice in Africa using various legislative instruments.
At the end of the first day, a panel discussion brought together high-level ATI representatives and experts to reflect on “the just transition and green recovery approach and its role in promoting DRM”. The session aimed at fortifying political commitment among ATI members on the topic of a better implementation of the ATI Declaration 2025 equitably and sustainably.
“For the policy to work and it to be a just policy, we must be sure that we do not force Africa into a carbon tax regime that may not be appropriate for its countries’ individual domestic situation.” – Logan WORT
Emily MUYAA, Chief of the Capacity Development Unit at the International Tax and Development Cooperation Branch of UN DESA, reflected on the role of a well-designed environmental tax policy for economic prosperity and sustainable growth. Underlining the absence of a “one-size-fits-all” solution, Ms Muyaa stated that each country should consider its realities, domestic situation, and the overall approach to sustainable growth. Logan WORT, Executive Secretary of the African Tax Administration Forum (ATAF), further strengthen the need for context-tailored policies. Referring to a study that estimated Africa’s share in the global emission level at only 3.8%, he emphasised that the carbon taxation agenda in Africa should not be pushed in the same way as for industrialised countries. On top of designing practical, well-implemented, and well-targeted environmental tax policies, Mr Wort pointed out that issues such as IFFs remain the main challenges faced by Africa in the post-COVID era.
“Unless it’s both just and green, we are all in deep trouble.” – Per Fredrik Ilsaas PHARO
Per Fredrik Ilsaas PHARO, Director of Partnership and Shared Prosperity at the Norwegian Agency for Development Cooperation (Norad), also argued that carbon taxes will be relevant in lower and middle-income countries if targeted towards big-emitting companies and the high-end consumption of the richest segment of the population. On the role of the international donor community to foster DRM through a green recovery, he reinforced the need to include green taxation in the broader DRM reform agenda. Mr Pharo noted that the international financial architecture put a challenge to the DRM efforts of developing countries by allowing large amounts of public revenues to be channelled to private accounts through tax evasion and IFFs. As such, the international community and the ATI are key players in effective reform advocacy which broaden and protect tax bases in developing countries.
Closing the first day of the General Assembly, Jürgen ZATTLER, Director General for “International Development Policy, Agenda 2030, Climate” at the German Federal Ministry for Economic Cooperation and Development (BMZ), called upon members to build on this momentum to make further efforts to achieve the ATI goals as well as the SDGs. The ATI Co-Chair and Deputy Commissioner General in Sierra Leone Jeneba BANGURA thanked all participants for their engagement and the opportunity for peer-learning and enhanced coordination of DRM support.
On the second day of the General Assembly, the ATI Consultative Groups met to discuss relevant topics and products related to the implementation of each commitment of the ATI Declaration 2025. The groups also presented the ATI post-2020 monitoring framework that will measure progress towards achieving the commitments under the ATI Declaration 2025. The session on the ATI Matchmaking Platform hosted a brief discussion on the application of the platform, the status quo of participation, and possible concerns and challenges for its active usage.
For more information on the 2022 ATI General Assembly, access the full meeting report here.