With the cost of corruption put at 5% of global GDP annually, this is a global scourge
Natalie Bennett is a former leader of the Green Party of England and Wales and now sits in the House of Lords
Committing the UK to get together with the rest of the world, particularly the parts that suffer most from global corruption and tax-dodging, which is the Global South, to tackle economic crime – that’s the not really very radical purpose of a group of amendments to the Economic Crime Bill being debated in the House of Lords today.
Lord Hain, a Labour former Foreign Office minister, with cross-party backing, is calling for the UK to back an international anti-corruption court, analogous to the International Criminal Court (ICC), to pursue and punish major economic criminals that cannot be dealt with by national courts.
With the cost of corruption put at 5% of global GDP annually, this is a global scourge, an emergency that is taking food from the mouths of children, robbing communities of vital healthcare and preventing the provision of vital infrastructure. It is also fuelling war, as the UN Security Council was told back in 2018, a reality that has sadly only become even more evident since.
It’s a good idea, and I’ll be offering the Green Party’s support today, but I’ve also got an amendment with potentially broader and greater effect. It calls for the UK to provide leadership in supporting UN General Assembly Resolution 77/244, passed last year, with leadership from Nigeria and the Africa group, which calls for the Secretary General to prepare a report on how to “strengthen the inclusiveness and effectiveness of international tax cooperation.” This has been seen as a step towards a UN convention on the issue, and the establishment of international bodies to enforce it.
The amendment says that within six months of the passing of the Economic Crime Act, the government must seek to begin negotiations with international partners to work towards the establishment of a United Nations convention on tackling global tax evasion. This reflects a reality behind the efforts to tackle corruption, the influence of the oligarchs and the plutocrats, the power of oligarchical, unaccountable companies and owners: no one country can do it alone. As Attiya Waris, the UN independent expert on the effects of foreign debt, told the General Assembly last year: “The shortcomings of the international and national tax systems require international cooperation and assistance. They cannot be addressed unilaterally.”
Chasing this money has been described as a “wicked” problem. The aims of the evaders are simple, their reach global, their ability to act measured in seconds. Nation states have complex goals of development, rights and the rule of law, their powers individually restricted within their own borders, their legal framework taking time to move into action.
The push for this UN Convention has got virtually no coverage or attention in the UK, but internationally, there’s a lot of work going on, as reflected in a letter sent in March to the UN Secretary General by scores of civil society organisations, including Action Aid, the Tax Justice Network and World Economy Ecology and Development.
They put it bluntly: “Decision-making on global tax rules has been left to non-inclusive forums wherein, especially developing countries have not been able to participate on an equal footing. This injustice is at the heart of the failure of the international tax system, which has continued to be characterised by inefficiency, incoherence, and beggar-thy-neighbour policies, which contribute to the alarming growth of global inequality.”
I wanted to table a broader amendment than that which finally ended up on the order paper – going beyond actually illegal evasion into the inequality of the current system – but that wider approach was ruled “out of scope” of the Bill.
Nonetheless, illegal tax evasion alone is enormous, the sums that could go into public hands instead of a few private criminals’ potentially transformatory. In 2021, the State of Tax Justice report estimated that countries around the world are losing up to US$450 billion per year from evasion and associated crimes. Other UN instruments to address corruption and crime – the Convention Against Corruption and Convention against Transnational Organized Crime; this would be a logical, complementary partner.
And there’s no reason this work should not go ahead right now. There’s been much work already done, including the Proposal for a UN Convention on Tax, which was published by the Global Alliance for Tax Justice and the European Network on Debt and Development in March 2022. This draws on examples of governance structures, approaches and principles from the Rio Conventions, international human rights instruments and the WHO Framework Convention on Tobacco Control.
The background for this is the nature of the 20th-century world, with existing international tax regime that has existed for decades under the framework of the OECD. Its main purpose was preventing double taxation, not collecting tax, but preventing its “over-collection”. It also excludes the majority of the world from its deliberations.
We hear talk often of “Global Britain”, of wanting to be “world-leading”. Well here’s a real opportunity. As Professor Lorraine Eden from University of Texas A&M puts it “large changes in international regimes usually require a tipping point and the cooperation of a like-minded club of nation states to lead the change”.
The UK joining with nations from the Global South, bringing its expertise and knowledge to the table, would certainly have an impact. And more than that, with the City of London being the global centre of corruption and tax evasion, it would be an important statement, as well as practical step, to reining in the crime wave that has swept the world over recent decades.
Competing in a world of laxer and laxer tax regimes has been a disaster for people and planet, an invitation to crime and corruption. Cooperation has to be the way forward to equip the world with the funds to tackle the looming polycrisis of environmental destruction, human desperation and rampant inequality.