On Friday 14 April 2023, GIESCR attended the high-level panel it co-organised: "Voices from the Global South: Fiscal Systems and Multiple Crises", in the framework of the Annual Spring Meetings of the World Bank and the IMF.

The panelists were the Minister of Finance and Public Credit of Colombia, José Antonio Ocampo, the Secretary of Economic Policy of the Ministry of Finance of Brazil Guilherme Mello, the economist and co-chair of ICRICT Jayati Ghosh, and the director of the IMF's Fiscal Affairs department Vitor Gaspar.

At the event, Brazil announced its support for the historic first Latin American ministerial summit on global taxation, convened by Colombia, and for tax reform initiatives that could raise revenue, tax wealth and improve the progressivity of the tax design, and thereby improve the response to the economic crisis in the region. The International Monetary Fund (IMF) has welcomed this call for regional coordination. 

Several countries in the region, including Colombia, are pushing for progressive tax reforms that include taxes on capital (capital income and multinationals) and wealth, either on a permanent or temporary basis. 

These reforms and the need for greater regional coordination to make Latin America's voice better heard in international negotiations on multinational taxation were discussed in Washington DC, USA.

Colombia's Finance Minister José Antonio Ocampo said that "the first tax summit that we have convened this year in Colombia must allow the countries of the region to speak with a strong voice in global tax reform negotiations. Reforms of the international tax system have so far been insufficient. It is important that India, which holds the G20 presidency this year, pushes for a new round of negotiations”.

He added that "income and capital gains are always underestimated. It is important to tax them and complement them with wealth taxes. And we hope that the IMF will join this movement."

Guilherme Mello, Secretary for Economic Policy at the Brazilian Ministry of Finance, commented that "we cannot continue to tax more workers and people with lower incomes, while we give exemptions to the richest and to large corporations." He also added that "in Brazil we have always had a long tradition of forming partnerships with developing countries. I think the process convened by Colombia is really important. It is an example of how we can move towards better taxation. We need to show a commitment that we can collect more in a different and fairer way. The Latin American tax summit is a message that this is possible."

IMF Fiscal Affairs Department Director Vitor Gaspar said at the event that "the OECD agreement is a step in the right direction and opens the door for further progress. We should not stop now, it is important to continue the momentum towards better reforms. Cooperation initiatives, such as the one proposed by Colombia, are always very welcome. We need to work hand in hand”.

Finally, economist and ICRICT co-chair Jayati Ghosh said that "taxing wealth is not as complicated as many argue. We should not rule it out. In countries with high inequality, it is the elites who always benefit. This has been the case and will continue to be the case if we don't change the rules." She continued her presentation by pointing out that "Colombia is showing us how much can be done in such a short time to implement different measures. And not just Colombia, we are all looking to Latin America and the Caribbean for inspiration (...) The OECD and G20 agreements on international taxation are a step in the right direction, but very disappointing, largely because of a process that has not been sufficiently inclusive. The process is key to determining what outcomes can be achieved, and that they are fair".

First Latin American and Caribbean Summit

In July 2023, the first Latin American and Caribbean Summit for global, inclusive and sustainable taxation will be held in Cartagena, Colombia.

The main objective of the summit is to address common challenges in international taxation in the region. The initiative, led by the Colombian Ministry of Finance, seeks to bring Latin American and Caribbean countries to align their positions on these challenges in order to find common solutions, something that has not happened in the past due to the absence of a space for regional cooperation and coordination at the highest political level. This has meant that the region's interests are not sufficiently visible in international tax policy debates and negotiations, and therefore the results achieved so far do not contribute significantly to the enormous fiscal challenges currently facing the region's countries.

ECLAC has made clear its full support for the initiative and its commitment to turn this first summit, unprecedented in the region, into a permanent tax decision-making body in Latin America. Therefore, ECLAC and Latin American and Caribbean leaders will meet in Santiago de Chile to establish the final structure and governance of this new regional space. 

The initiative will have 3 key moments:

• May 2 and 3 (Bogota, Colombia): Academic event Rethinking global taxation: towards an inclusive, sustainable and equitable system, an event where the different relevant issues to be addressed by the governments of the region at the Summit will be gathered. 

• May 15-16 (Santiago de Chile, Chile): Pre-summit on governance at ECLAC.

• July 27-28 (Cartagena, Colombia): Latin American and Caribbean Ministerial Summit, where the issues raised at the pre-summit will be discussed and the structure and governance of the new regional platform discussed at ECLAC will be finalised.

Latin America is the most unequal region in the world with highly regressive tax systems 

Latin America and the Caribbean remains the most unequal region in the world. In 2019, the richest 20% of the population had almost half of total income, while the poorest 20% had less than 5% of total income. The richest 1% of the region owns almost a quarter of total income. 

Wealth has continued to concentrate at the top of the pyramid. According to Oxfam, since the start of the pandemic, the wealth of billionaires has increased by 21%, a growth rate five times that of regional GDP. One hundred billionaires now own more wealth than 392 million people, or 60 per cent of the region's population. 

The OECD/G20 agreement of October 2021

After years of negotiations involving 140 countries, in October 2021 the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) announced an agreement based on two pillars. 

With nearly 40% of their international profits accounted for in tax havens, a fairer reallocation of "taxing rights", based on actual activities, including sales, also seems imperative.  

A global minimum tax makes more sense than ever. Tax avoidance by multinationals costs countries between $240 billion and $600 billion a year in lost revenue. 

However, what was supposed to be "the landmark agreement", led by the G20 and the OECD, already lacked ambition and fell short in both requirements and revenue-raising potential. 

It is therefore urgent that developing countries organise themselves regionally and establish South-South coordination. This would allow them to introduce alternative tax measures at the regional level that would allow them to better tax multinationals, but also to have more leverage in future negotiations, in order to obtain a more balanced agreement.