Statement to the Thematic Round Table A on Domestic and International Public Resources by the Civil Society FfD Group (including the Women’s Working Group on FfD), delivered by Wolfgang Obenland, Global Policy Forum on May 24, 2017 (FfD Forum 2017)
Thank you Madame Moderator, I am speaking on behalf of Global Policy Forum and the larger CSO FfD Group.
It is in fact laudable that several governments as well as international institutions have increased spending on building capacities within tax administrations and it is one of the more sensible things to spend ODA on and without a doubt a worthwhile endeavor for regional cooperation. However, if not done right, even capacity building could have adversary effects. Let me just name two:
- It is paramount that we do not just talk about resources for capacity building, but also about what kind of capacity is being built. The question, in other words, is not so much, who the student is, but rather, who wrote the textbook, who chose the teacher, and in fact, who that teacher is and what she does in her free time. For example, our colleagues at the European Network on Debt and Development found in a study they did on “Tax Inspectors without Borders”, that there in fact may be conflicts of interest if donors pay employees of accounting firms to act on their behalf in consulting tax administrations in the South. To counter such potential problems, the principle should always be that capacity building is demand driven, that facilitation is transparent and that local ownership is ensured.
- Secondly, it is necessary to talk about what kind of capacity is being built. Will it be all about how to increase tax flows/or improve the tax rates, or will this include aspects of tax fairness/progressivity, of gender equality and human rights? In our view, these aspects are absolutely indispensable. And it brings us back to the question of who should write text books. Should it be an institution that has human rights, gender equality, fighting inequalities, and sustainable development at heart, or should it be institutions that have but only one paradigm, never-ending economic growth?
- And finally, let’s take a step back and take a truly ‘universal’ view at the issue of capacity building – as the 2030 Agenda demands of us. Is this really a matter for the traditional forms of north-south cooperation, only? The countries of the global North – as is widely acknowledged – have capacity issues within tax administrations of their own. In fact, in certain parts the weakness of tax administrations has been boasted as a locational advantage for the attraction of investments. This may not only have distributional effects, but also be harmful to the effective exchange of information. In other words, northern governments should not just be handing out patches to others, but also recognize their own wounds and how these may have influence on others.