Davis again highlights hypocrisy of the developed world

Last year, Prime Minister Philip Davis pointed out to the United Nations (UN) General Assembly that the European Union (EU) and organizations like the Organization for Economic Cooperation and Development (OECD) are blatantly unfair in their treatment of small countries, particularly those in the Caribbean.

“The evidence is mounting,” Davis said at the time, “that the considerations behind these decisions have less to do with compliance and more to do with darker issues of prejudged, discriminatory perceptions. Black-governed countries also matter.”

While we do not so readily ascribe the policies of these major economic actors to racism on the part of these organizations, the fact remains that their policies disproportionately impact countries like The Bahamas.

There is no question that these policies are unfair.

However, we suggested that the government should look at ways to better comply, as these powerful countries clearly do not care how we are affected; they only want the tax dollars they claim are being kept from them.

But last week, while speaking at the G77+China Summit in Cuba, Davis made a call for what would likely be a more effective way of dealing with these issues.

He urged the G77 to more actively support the United Nations as the body for international tax governance.

“The United Nations is the appropriate body to design and build a truly equitable and inclusive international tax administration architecture with equal footed representation, an environment of one country, one vote,” Davis said.

“For too long we have all lived in an environment where global tax policy was mandated and designed by the OECD, where concepts underpinning the current international tax system prefer the interests of the global north; that is, OECD members and developed countries, at the expense of small developing countries, primarily black-governed former colonies in the global south, former colonies of those same members of the OECD.”

Davis continued, “The arbitrary and discriminatory actions of the OECD and EU have disproportionately affected countries of the global south, already reeling from actions and impacts of countries from the global north.

“The climate crisis is largely created by industrialized countries, many in the global north. The effect of the climate crisis is felt disproportionately by small developing countries like The Bahamas.

“This is exacerbated by the arbitrary blacklisting of these same vulnerable countries such as The Bahamas, from the very same countries that are responsible for the climate crisis. For example, when it comes to insurance, these blacklists result in any remittances from European reinsurers on claims being automatically reduced by at least 25 percent.

“A significant percentage of the monies owed is punitively retained by the EU. We are thus poorer and less able to rebuild because of the effects of the climate crisis.

“We demand equal treatment, we demand the UN be the proper arbiter in tax matters, we demand privileged multilateral organizations like the OECD take your knee off the proverbial necks of countries like The Bahamas, countries of the global south.”

Despite Davis’ complaints, The Bahamas has already signed on to align our tax policies with the OECD’s Pillar Two rules, as it should have.

Pillar Two seeks to introduce a global minimum level of tax for multinational entities earning consolidated turnover of at least €750 million per year.

The proposed rate is 15 percent.

The “Corporate Income Tax (CIT) Strategies for The Bahamas” green paper released earlier this year, outlined four possible new tax structures for businesses in the country and the government’s guiding principles in implementing the CIT.

However, the UN resolved last year to take a more active role in global tax policymaking.

The current discussions within the UN reflect the growing awareness of the need for a more coordinated and equitable approach to international taxation, given the increasing globalization of economic activities and the challenges posed by aggressive tax planning by multinational corporations.

The aim is to create a fair and stable international tax framework that benefits all countries and helps combat tax evasion and avoidance.

It is doubtful that the UN would supplant the OECD, but the UN’s increased role could force the OECD to work more closely with developing countries as opposed to simply dictating from on high.

With The Bahamas forging closer ties with African countries, many of which have very serious issues with the OECD, Davis should seek to build a coalition with them and the Caribbean to be more vociferous in calling for a shift away from the OECD.

Show More

Related Articles

Check Also
Back to top button