Rethinking Humanitarianism | Why humanitarians should care about tax justice

Heba Aly

They say two things in life are certain: death and taxes. But taxes – and how they’re collected – are anything but certain, and certainly not fair. 

Melissa Fundira

In 2019, author Rutger Bregman made a scene at the World Economic Forum’s annual meeting in Davos when he made this now-infamous assertion: 

Rutger Bregman, Davos 2019: I hear people talk in the language of participation, and justice, and equality, and transparency, but then I mean almost no one raises the real issue of tax avoidance. Right? And of the rich just not paying their fair share. I mean, it feels like I’m at a firefighters’ conference, and no one’s allowed to speak about water. This is not rocket science. I mean, we can talk very long time about all these stupid philanthropy schemes. We can invite Bono wants more. But come one, we gotta be talking about taxes. Taxes. Taxes. All the rest is bullshit in my opinion.

Heba Aly

The feeling is shared within the humanitarian sector, too.

Dustin Barter, Rethinking Humanitarianism, Dec. 2023: Tax is really critical to funding, whether it's the Western donor countries – which ideally we get away from that – but then across the Global South, across crisis-affected countries. Taxing wealth, taxing extraction, taxing inequalities, addressing inequalities – that's where humanitarian crises need to be addressed.

Melissa Fundira

According to the tax justice Network and the Global Alliance for tax justice, nearly $500 billion are lost to corporate and individual tax abuse every year. And in the next 10 years, countries are set to lose $5 trillion due to tax evasion alone.

Heba Aly

What does this have to do with humanitarianism?  Well, the less countries collect in taxes, the less money they have to spend on healthcare, climate adaptation, and pandemic preparedness. And the more they have to depend on humanitarian aid when crises hit.  At a time when donor countries are tightening their belts amid rising humanitarian needs, it’s becoming more important than ever to find ways to reduce the burden on humanitarian response. 

Melissa Fundira

Fairer international taxation policy could be one way to do that. In November the UN General Assembly voted to start negotiations on an international tax treaty. The move is being described as “the biggest shakeup in history to the global tax system.”

Dr.Chola Milambo, Chair of the African group: The human aspect of this convention cannot be overstated. By reforming the International Financial system and ensuring fair taxation, we can significantly reduce the strain on international aid. More revenue for the Global South translates into less dependence on ODA, fostering a more self-reliant and resilient world economy. 

Heba Aly

So why should humanitarians be paying attention? And what could it mean for aid-dependent countries to recoup trillions of dollars in lost tax revenue? 

From Geneva, Switzerland, I’m Heba Aly.

Melissa Fundira

And from Toronto, Canada, I’m Melissa Fundira. This is Rethinking Humanitarianism, a podcast about the future of aid in a world of rising crisis.

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Melissa Fundira

So Heba, before we get to this week's episode on tax justice, I want to talk a bit about our last episode, which was about how to step aside to promote change. Specifically, how mostly Westerners who are over-represented in leadership roles in the sector can or should step aside to make space for leaders from the global majority and other marginalized groups. And clearly, that episode really resonated with listeners. It definitely got more feedback than usual. And I want to play for you a couple of clips that we got from listeners. The first one is from Kate Moger who is the Director for the Pledge for Change. She’s based in Nairobi. Works for Adeso. And she really related to one of our guest’s reflections, Diana Essex-Lattieri, on the the emotional attachment that people have to the sector to the career machine, as she put it. And this is what Kate Moger had to say. 

Kate Moger: It was great to reflect, including with colleagues, on what this stepping aside, looks and feels like, the kind of attachment that we have to our roles, to our power in the sector, and how moving on from that can spark all sorts of different emotions. Actually, as we're talking about shifting power and decolonising aid, a much better metaphor is to think of myself as being a really great tenant of a role, making a place that can work really well and really effectively for others before moving on to doing something else elsewhere in the system.

Heba Aly
We also got an email from Leo Kortekaas, who has worked in humanitarianism and development for more than 30 years. He's based in the Netherlands and he sees stepping aside as a natural part of his job, especially as the sector moves towards localisation.

Leo Koretekaas: I was asked, or did, step aside three or four times during my 30-plus years working in human humanitarian and development sectors. While working capacity is being shared, and while this is being done, there is always a moment the team does not need me anymore. This is, I think, the real development – enabling people to take their own future in their own hands. I'm always happy to see the work continue after I left, happy to be made redundant, knowing people in their organisations will be able to continue the work because capacities have been shared to ensure transparent implementation, and quality and sustainable impact in the lives of people. Especially important is also to make contacts between them and to donor organisations. Make them independent. People and their organisations know what they need to do to develop their country or region, and how this can be done the best possible way. 

Melissa Fundira 
If you'll recall, and if you don't, I recommend you go back and listen to that episode, we looked at the case of Ignacio Packer, who was the executive director of ICVA, the NGO consortium based in Geneva. And when he finished his term, he let it be known that he wanted his successor to better represent the people the organisation serves. Ignacio, who is a white Western man, ended up being succeeded by another white Western man. 

Heba Aly
Now after several requests for comment, we did finally receive a response from ICVA’s board of directors, which led the hiring process. And they sent us a long email which I want to go into in a bit of detail because I think it highlights how intentions towards diversity unfold in practice. And it should be noted, ICVA’s board is itself very diverse with representation from Africa, from Asia, Central America, the Middle East and Europe, and is led by a woman from Pakistan. So the board said they had specifically sought out a recruitment firm with experience in diversity, equity and inclusion:

“Every effort was made to ensure a diverse pool of candidates, including to encourage female candidates and candidates from the global South.  The interview criteria was applied equitably. The advertised role profile stated our intention for diversity, equity and inclusion.”

 But they noted:

“We did not explicitly state that female candidates or candidates from the global south would be preferred.”

So they went through two rounds of recruitment, and in the first round, 78% of long-listed candidates were women, 56% were from the Global South. But the board didn't feel that any candidate had the required competence and experience. They went out again, and in the second round, 1/3 of the shortlisted candidates were women, 1/3 were from the Global South. And as we said, ultimately, a white Western man was appointed. So what happened? and and why, despite their seemingly genuine intention for greater representation in the role, and their efforts to that end, did they not get that result? Part of that

Melissa Fundira  09:18
Part of that long statement that they sent us, they also sent a list of the things that they learned through this process. And I also want to go through some of that with you. They said:

“Simply wishing to see greater diversity is nothing without identifying the blockers to greater DEI.”

They go on to say that:

“Aspirations must be translated into changes in policies and procedures to enable change.”

So for example, they noted that there were structural and systematic barriers: location, salary ,relocation costs, the sector's concentration in Geneva. And they noted that they also need to understand and weigh competencies and attributes differently. They also pointed to the need to shape a Terms of Reference and benefits package around the kind have talent they were trying to attract. And they noted that it was “a different way of thinking”. And they also noted a second time that the requirement for the role to be based in Geneva was a significant stumbling block, in part because attending a work permit can be a key challenge, and in part because the package offered wasn't seen as adequate to compensate for an international move, or to cover the cost of housing and childcare in Geneva.

Heba Aly
And so they ended the statement by saying that:

“The process has raised a number of questions on how ICVA and the sector can push the systemic change and go beyond tokenism and wishful thinking.”

They did note however, that:

“This was a long and detailed process and ultimately a successful one as the Board was delighted to have recruited the candidate with the requisite experience and competencies to do this very difficult job.”

Melissa Fundira
So a lot of introspection, from the board here about how that hiring process went down.

Heba Aly 
And I think it really reaffirms what we took away, at least what I took away, from the last episode, which is that there are some real operational questions that need to be considered if any effort towards greater representation and diversity will be successful.

Melissa Fundira 
We want to thank everybody who sent us a voice note, an email, and a reminder that you can always reach us at [email protected].

Now to get to this week's episode, I do want to pull back the curtain a little bit here for listeners Heba, because we debate every episode topic, you know, pretty heavily between you and I. And tax justice was no exception, not because we didn't think it was interesting, but really because we wondered, of course, well, what does this really mean for humanitarians? And it seems as if the universe kept sending us signs that it did matter to humanitarians. I think probably every other week or every other month, there was an email that came in or a guest that would mention tax justice in some way, shape, or form. It started with the UNGA when the think tank Global Nation launched that Global Solidarity Report, and one of their calls to action was to set up a UN entity to support tax justice. In our year and episode, our guest Dustin Barter of ODI’s Humanitarian Policy Group, surprised all of us, I think, when we asked him well, what do you think is the most urgent rethink of 2024? And he said tax inequality. And a few days after that you moderated an event where another panellist mentioned tax justice and the hopefulness that she felt about recent movements towards a UN tax entity.

Heba Aly  12:28
And it's interesting because as we've been trying to piece together the drivers of aid dependency and how to respond to needs in an age when there's just never going to be enough humanitarian aid or humanitarian funding to go around, the same themes keep coming up. And the legacies of colonial structures that inhibit a country's ability to handle crises effectively is one of them. And I think tax justice falls very much in that category. And according to research from the University of St. Andrews, where it not for the $480 billion that's lost to abusive international tax practices every year, 15 million people would have access to water, 32 million would have access to basic sanitation, the lives of 37,000 children would be saved through reductions in child mortality. So this has very real implications. Now, it's mostly a tool, admittedly, for countries to be better able to pursue development goals, but it does have humanitarian implications, too. As one of our guests told us before this interview, there's a reason why an earthquake in Japan doesn't have the same impact as an earthquake in Haiti. So a lack of development has obvious humanitarian consequences, and now we're seeing a lot of momentum on introducing global standards via the UN to address this.

Melissa Fundira  13:56S
And that momentum extends beyond just the UN. Some nations are just taking it upon themselves to increase taxes on the wealthy to increase taxes on corporations. Just a year ago, for example, Colombia instituted a 15% minimum tax on corporations. They are also reintroducing a wealth tax. Spain also introduced a wealth tax, though it’s temporary for now. And Brazil is also proposing a more progressive tax code. They also just took over the presidency of the G 20, and they've added taxation to the agenda. But the issue is that wealth can run away. If only Brazil, or Spain, and Colombia institute a wealth tax well, then the ultra-wealthy can just decide to go to the next country with lower tax rates or zero tax rates, which is what's happening in Spain, for example. A lot of wealthy business people have already threatened to leave the country because of this wealth tax that they're trying to introduce. 

So today, we're joined by two guests who will help us make sense of the growing tax justice Movement, the recent developments that we mentioned and why they should matter to humanitarians. Hassan Damluji is the co-founder of Global Nation, a think tank that promotes international cooperation as a way to tackle climate change, conflict, and development. Global Nation published the Global Solidarity Report that I mentioned just now, and among other things, it calls for the creation of a UN entity to promote tax justice. He is also the author of The Responsible Globalist, which, among many things, lays out a proposal for a global wealth tax. Welcome, Hassan.

Hassan Damluji

Hi, nice to be here. Thanks.

Heba Aly  00:30

And Alvin Mosioma is the associate director of a program at the Open Society Foundations that sits at the intersection of climate, finance and equity. Before that he was the founding executive director of Tax Justice Network-Africa. And Alvin is the author of that article Melissa just mentioned in the Global Solidarity Report about the need for a UN Tax entity. He’s joining us en route to the airport in Nairobi, so hopefully his connection will hold. Alvin, welcome to the podcast.

Alvin Mosioma  00:44

My pleasure. Thanks for having me.

Heba Aly  00:48

So Alvin, maybe to kick us off, help us set the stage for this conversation? Could you lay out the current state of tax abuse in the world, and that term includes both tax avoidance, which is legal, and tax evasion, which is illegal, but who tends to do it? Who does it affect? Walk us through the status quo.

Alvin Mosioma  01:09

The first framing here is to understand that state capacity is tax capacity, and vice versa. The capacity of [the] state to provide or to fulfil its obligations is directly linked to its ability to finance those obligations. And this is where the essence of taxation becomes very, very important. Particularly for countries of the Global South where the financing question is even more critical, and the ability of states to collect revenues from activities that are happening within their jurisdictions is really, really important. And here, the foundation of the taxes movement is really linked to the question on how do we ensure that countries are able to finance their development from their own resources, from their own domestic resources, and curtail their perpetual reliance on external financing, on aid, and other financial resources? Now, what we see the reality is that for many countries of the Global South in Africa in particular is that these countries are haemorrhaging. They are losing significant resources as a result of loopholes in the international tax system that allow rich multinational companies and the wealthy to plan their financial obligations in a way that they are not paying tax or they’re minimising their tax obligations. And as a result of that, it's the poor that have to carry the burden of financing the activities of the state. So when we talk of tax justice, it's really three things. One, is how do we ensure that those that are able to pay are contributing to that by ensuring that we are putting into place policies, tax policies, that seal the loopholes, that allow the rich and the wealthy and multinational companies through tax avoidance, through the phenomenon of tax avoidance and tax evasion, to ship profits from the jurisdictions of the countries where the economic activity is happening to secret jurisdicitions and tax havens, where they're able to minimize or not pay their taxes at all. That's one. Then secondly, tax again is a social contract between the state and the taxpayer. You pay your taxes, and you demand your services. And this is a thing a very critical point. And lastly, particularly in view of the emerging climate crisis, it has become obvious that tax can be an instrument mitigate some of the very adverse impact we're seeing. We're seeing the conversation around climate financing, taxation of harmful practices, and ensuring that tax is playing its critical role in terms of mitigating adverse climate change.

Heba Aly 

And just briefly, Alvin, when you talk about these countries haemorrhaging resources because of loopholes in the international tax system, how is this currently being regulated, if at all?

Alvin Mosioma

So there has been several attempts over the last 10, 20 years to try and address this phenomenon of what is now called illicit financial flows. Largely the main driver of this has been a project by the OECD called the base erosion and profit shifting [BEPS]. [It’s] important of course to underscore that tax avoidance not only affects poor countries, it affects rich countries equally, because these multinational companies, of course, they are not paying taxes. Neither are they paying taxes where they're registered, nor are they paying taxes when economic activity is happening. They’re shifting those taxes into tax havens. So the effort that the OECD started back in, I think, in 2021, was one of the first processes that attempts to try and seal some of these loopholes. But then concerns that many of developing countries were raising was that OECD is a club of rich countries, and the solutions that they were putting on the table were solutions that were more to the interests of those that were on the table. And it’s out of this that developing countries have been pushing for a long, long time to have this conversation shift to the UN and ensuring there’s a democratic space where each country has a voice in terms of determining what kind of solutions you need to put on the table. And it’s out of this that recently we saw the efforts by the UN towards establishing a UN convention that would be, in my sense, a groundbreaking move in terms of not only democratising the international financial system, but ensuring that the voices of poor countries that are bearing the biggest brunt of tax evasion and tax avoidance are also on the table in the design of the solutions.

Melissa Fundira 

Before we get to that UN tax resolution that recently passed, Hassam, we just heard Alvin reference the OECD, the Organization for Economic Cooperation and Development. As he said, it's a rich country’s club. It's based in Paris. And it's been dominating the international taxation space for over 60 years, even though it only really represents about 38 countries. So how did it come to be that this rich country club, essentially, is the one in charge of managing international taxation? How do we get there?

Hassan Damluji  07:18

Well, I think it's the same reason that the Security Council controls global peace and security despite being only five permanent members. NATO has its own role, despite its limited membership. And in general, the international system has not been designed by and for the many, although it has been designed with a view to having sufficient acceptance as to have a general mandate. And those are very different things. And I would like to start by just reminding ourselves what tax is. I mean, the comments that have started with which is ‘the only thing that's certain is tax and death’ I think is the quote. It implies that it's this burden, and some negative thing is often thought is a boring thing, an accounting thing, something you just got to do. And of course, it's a burden on all of us. But fundamentally, it is a supreme act of solidarity. It is the primary mechanism through which society pools its resources for the good of everyone. And that is an extraordinary thing, a beautiful thing. It's the symbol and the resources of this shared work that we do as society. And then, as Alvin rightly said, is then for the state, its capacity is inextricably tied to how much tax it can raise. And I want to also just mention the deep history of tax justice. Anyone who knows about the French Revolution will remember that one of the primary causes of overthrowing the King of France was the fact that the nobles didn't pay tax in France. And that exemption felt extraordinarily unfair. Adam Smith, basically the founder of economics, modern economics, marvelled that Britain collected twice as much tax as a proportion of its GDP to France, and yet in Britain, the taxes were accepted by the population, in France, they were not. And the reason for that is there was a sense of fairness in Britain,  imperfect as it was, but there was some sense of fairness. Of course, the American Revolution itself was founded on this idea that ‘no taxation without representation’. So tax justice is a supremely important issue in the formation of nations, but also in the formation of this international community that we live in. And you asked at the beginning, Heba, ‘why is it that humanitarians should care?’ Humanitarians believe the world needs to come together to some extent, that we should be cooperating, and maybe particularly in the sense of crises and catastrophes. And humanitarians will be very concerned by the developments that we see in the world over the last few years. And actually, tax justice is one of the issues that has unique promise and where there's been unique momentum. And even if you're not to get nerdy into the details, you should be aware of that from the point of view of that bright spot. But actually, I would beg people to get over the kind of maths of it and to get nerdy about the details…

Heba Aly

We love getting nerdy on this podcast, go for it. 

Hassan Damluji

Yeah, and it's so important because actually, this is an issue where nationalists who only care about their own country can form an alliance with internationalists who want to see a better international system, because you cannot as a country, tax your rich, your companies, unless you cooperate, because otherwise, they'll just go to Luxembourg or the British Virgin Islands or anywhere else. So you cannot maintain sovereignty over taxation without cooperation. And that is why, unlike issues like migration and others, sources of debates and conflicts, this is an issue where, despite the powerful forces that are trying to keep the status quo, there's a real opportunity for a cross style cooperation between people who are primarily not internationalists, and those that are. And if we make progress, that is what's going to produce the funding that will avert or mitigate some of the humanitarian crises that we're so concerned about.

Melissa Fundira

Let's talk about this progress that you've both been referring to in the last few months. I don't think I've heard the term tax justice mentioned more, especially not in the humanitarian space, but it seems to keep coming up over and over again. And of course, a large part of that is because of the vote that took place at the UN General Assembly in November. Alvin, you're one of the people who have been advocating for a UN tax convention for years. Can you explain to us what this campaign for a UN tax convention is exactly? And what would it do?

Alvin Mosioma

The calls for the reforms of international taxes at the UN is not unique in that sense. I think, the dominance of rich countries in many of these political and economic spaces between be it, for example, the IMF, the World Bank, we have seen a lot of concern coming about the interests of the West are very dominant in many of these spaces. So in that sense, the demand for a more democratic space for rulemaking on tax is aligned to voices and the demands that have been made by other groups across different economic issues, which is really about democratising the economic sphere, and ensuring that the resources, as Hassan was saying, are being shared in a manner that is fair, that is equitable, both at the national level and globally. Actually, as a matter of fact, the clarion call that started back in 2015 on the UN tax convention was that if you're not on the table, you're on the menu. If you're not on the table where the decisions and the discussions that are being made, then most likely the implications are going to harm you. And that, I think, has been a rallying point for different groups: trade unions, student movements, and other civil society organisations that have been pushing for this. Why has this been groundbreaking? I think this is one of those cases where, obviously, we have seen a very strong global solidarity. Yes, the effort was being led largely by African countries over the last decade. Africa has played a leadership role in demand. But we saw countries in Latin America coming in solidarity in a collective  that made sure that the countries of the Global South are getting their voice when it comes to the design of the reforms of the international tax structure. The other thing, I think, which is really important to underscore is that without losing ourselves into the nitty gritties of how these accounting systems actually work, studies have shown actually that, for African countries for instance, every dollar that flows into the continent in [the] form of aid and foreign direct investment, there are $10 that are flowing out as a result of illicit financial flows – which is, again, tax evasion and tax avoidance – while the international focus is on how to get more external resources. So we are having a debate that is focusing on the wrong… having a wrong focus, because while there's a lot of effort on ‘how do we increase aid to the continent, how do we ensure that Africa is attracting more foreign direct investment’, as legitimate as that is, the reality is that these countries are actually raising sufficient revenues, but those revenues are not finding their way into the state coffers. Instead, they are finding their way into the tax havens in the British Virgin Islands. And not just by multinational companies, but by [the] wealthy elite even within the continent. So when we talk of addressing the question of the global inequality, the inequality that exists within countries, I can't think of a better tool.

Melissa Fundira

Alvin, what would a UN tax convention have the power to do, exactly?

Alvin Mosioma

Right now, we are at the very initial stages of rethinking the international taxe system. But in essence, it is to do two things. One, we are putting in place the kind of regulation, international regulation frameworks, that ensure that companies that are conducting activities – particularly in the Global South, which as I say, is bearing the largest brunt – they're actually paying their revenues in those countries, and they’re not finding ways of shifting those profits to jurisdictions where they are not paying taxes. That's one of the most fundamental things I think a UN tax convention… it will ensure that we are overhauling the international tax system, and ensuring that companies that are at the moment paying minimum or zero tax, despite generating billions and billions of dollars annually, that those revenues are fairly being taxed, and those revenues are being kept in those countries where those economic activities are happening, and then contributing to the state building. That is one. Then secondly, it’s ensuring that the voices of the Global South are on the table. That I think is probably the biggest shift, that we have a framework where countries of the Global South have a voice in terms of the design of solutions, in terms of how companies and the wealthy are being taxed in the different jurisdictions.

Heba Aly

Unfortunatley, we’ve just lost Alvin due to connection issues. But Hassan, you lay out a different proposal for tax justice in your book that doesn't involve the UN. I'm curious to hear what you suggest, but also why you think that approach may be more effective than then UN-led approach that Alvin's just been describing.

Hassan Damluji

The approach that I wrote about doesn't exclude it being done by the UN. And I think it's a great forum for it to be done by. I do worry that although the UN tax convention received a majority of votes and therefore will progress from a procedural point of view, the staunch opposition of the United States, and the EU, and the UK, which together are not far off half of the world's economy, despite being only a few votes in the UN and a small proportion of the people. If you don't have those countries signed up, how far we'll get. And is there now a huge amount of work to be done just to get them on board and to raise the costs of those countries continuing to oppose the global merger before we can actually move to a place where you could have a text that was implementable? But maybe just to touch on what my proposal was. It's very aligned with what Alvin was saying about making sure that companies are paying the right amount of tax in each jurisdiction. But I really emphasize the importance within that of a wealth register. When it comes to land and when it comes to development, people will know that it's very important that we understand who owns which plots of land. There was a time when most wealth was in land. And in all economies that have succeeded in economic growth, there is a clarity on who owns what lands. But extraordinarily, when we get to financial instruments, which have become the vast majority of wealth now, it's completely opaque. And you will be told that it's impossible to have a wealth register where we know who owns what, because people's property won't be safe, and there'll be subject to hostage attacks, and this and that. Well hang on a minute, it was always the case that we knew who owned what lands, why suddenly is this financialized wealth of such a different category that it's okay for it to be completely unknown who owns it? No. The fundamental starting point of fair taxation is a register. Now it doesn't mean that everyone from the public necessarily can view it, although some people will say that's also a good idea. But it needs to be known. Secondly, there was the point that Alvin made around how companies are taxed. Thirdly, and I think this is a unique proposal of mine, is that we need a millionaire's wealth tax that's hypothecated for international development, including humanitarian [aid]. And the reason for that is follows. Firstly, why a millionaires’ wealth tax? I'm not the only person to call for that. Thomas Piketty has been very vocal in that, as have other. If you're a millionaire, just like a corporation, you can put that excess money over and above the million dollars, that's probably your home and things that are hard to move. That second million, the third million, the billionth dollar – you can put anywhere in the world, you can essentially avoid taxation. Unless that wealth is taxed in a way that we all agree that you can't hide. Every country has to have a millionaire's wealth tax, otherwise, no one can have it. And we used to have quite high taxes on wealth in some countries. France was the last major economy after many, many others to scrap that because you just can't do it if others aren't doing it because the money will leave. So you need a coordinated millionaires' wealth tax amongst countries. And then why hypothecated for development? The problem with international development and humanitarian [aid] is that people in rich countries who don't feel particularly rich are being told that they have to pay for crises in Africa and Bangladesh and wherever crises are. And they said, ‘Well, I'm not a rich person myself.’ They may not be benefiting that much from the globalized economy, but millionaires are, almost by definition, they are profiting from an international system that keeps their money safe, and they have an obligation to contribute towards keeping that world safe. And so if we were to say each country were to have a contribution, not based on 0.7% of GNI, which is a completely arbitrary number, but based on a very, very small proportion of the wealth held by millionaires, that would be not only a fair way of raising the resources we need for humanitarian aid, it would also be a visibly fair way of doing it. One that takes the burden off the back of someone that happens to live in a rich country but is actually poor, and really puts it on the back of those people who have profited so much on the international system. So I think real clarity on who owns what companies, paying their fair share wherever they're doing business, and then millionaires being unable to escape contributing to taxation, and some proportion of that going towards humanitarian crises is a system that altogether strengthens international systems and justice, but also strengthens countries, because the rest of that money, of course, will be paying for hospitals and schools locally. So I think that's the kind of fair system that gives something to the right, something to the left, and hopefully, we can get behind.

Melissa Fundira

Recently, the OECD proposed a global minimum tax, which would be a tax of 15% on corporations that make above a certain amount of money. Is your is your proposal basically aligned with this? Are you happy about that happening? Or are you suggesting something that you think would be more effective?

Hassan Damluji

I'm very happy about that happening because when I wrote my book before that was announced, I think many people would say it's extraordinarily unlikely that countries would agree to a minimum level of taxation. They have done that, but on corporation tax rather than what I was talking about, which is a millionaires’ wealth tax. So the precedent that it sets is an extraordinary one, but actually, my proposal is quite different. I actually don't think you really need a minimum corporation tax, as long as you had really effective rules for establishing what proportion of the revenues of each company and the profits of each company accrue to each jurisdiction. You could then tax it at whichever rate you liked, and you would be able to capture the tax from your own jurisdiction. So in other words, Amazon sells me a book in my country, the profits it makes from that book should be taxed in my country, whereas that's not the situation now. Actually, it turns out Luxembourg Amazon sold me that book, and so it's going to be taxed in Luxembourg where they don't pay tax. So as long as you fix that, in which jurisdiction is the revenue or the profit taxed from a transaction, you don't need that minimum. What the minimum does on a corporate taxation is it gets around the complexity of having to work that out and says, ‘Well look, at least if we have a minimum, then that's the kind of shortcut.’ On millionaires’ wealth tax, there really is no other way of doing it than as a minimum, because millionaires aren't doing transactions as such. The money is just sitting there, and they're going to pick it up, and they're going to put it somewhere else. So it's got to be taxed wherever it goes because it can go anywhere. So they're slightly different proposals, but it's fantastic to see countries agreeing to a minimum. I will put caution around its implementation. It's not the case now that that has just been implemented. But it was quite a striking agreement.

Heba Aly

I want to come back to the UN Framework, or rather, the commitment to develop a framework and address what I think is one of the key challenges. The UN has rarely had the power to enforce anything. And if we look at the Framework Convention on Climate Change [UNFCCC] as an example, and that’s the body that coordinates climate negotiations, we see a very similar model whereby it can come up with agreements, but it doesn’t actually have the power to force countries to deliver on those agreements. So how would a tax convention be any different? And I know this isn’t necessarily the proposal that you're bought into, Hassan, but curious for your views.

Hassan Damluji  

Yeah, no, look, it's a great question, Heba. I mean, were the UN negotiations to adopt my suggestions or anyone else's, how do you take that from being a piece of paper into something that gets implemented? And I don't think you do that unless you can get the major economies on side. And I slightly pivoted earlier when Melissa asked me why it is the OECD have this role. Really the reason why the G20 and the OECD have that role is because that is where economic power lies in the world. And they're actually able to push things through over the backs of the smaller economies. May not be fair, but they can do it. The idea that the UN can push things through, despite the opposition of the US and Europe, I find hard to believe. There isn't a good record at turning international systems into enforcement mechanisms. The [Responsability] to Protect since 2005 was an attempt at doing that in protect in perhaps one of the hardest environments, which is that of conflict. It hasn't gone well. It would be hard to say that since the [Responsability] to Protect was established in 2005, we now live in a world in which that is just implemented as a norm. Taxation, may be slightly easier than that, because fundamentally, it's all money. The costs to a country of not signing up to whatever the agreement was, would be financial. And countries would be able in principle to apply financially costly penalties along the lines of trade or other types of disadvantages that would make the calculation unwise for that country, and they could be brought in line. You wouldn't have to invade a country in order to get them to be in line with tax agreements, you could make the costs of not signing up to it too high. In fact, Emmanuel Macron has talked about only signing trade deals with people who are going to collaborate with him on taxation, right? So you can imagine that. But coming back to my original point, without America being signed up, and Europe being signed up, it's hard to see the world having the ability to impose those kinds of penalties on countries that don't adopt it. Everyone wants to trade with America, and Europe, and with China. If they were to say, you can only do it, if you apply this tax treaty, then you can be sure that most countries would comply.

Melissa Fundira  

I meean, we’ve established Hassan, that ultra-wealthy individuals, multinational corporations are very, very good at avoiding taxes. So who's to say that even if we were to implement some sort of global tax treaty, that they wouldn't be able to do the same? To find loopholes or to just carry on without meeting these globally set standards for tax cooperation?

Hassan Damluji  

Well, they would be able to do the same. I mean, if you go back to the origins of real efforts to try and make the world a fairer place – ending slavery, trying to have self-determination of nations, trying to ensure human rights – I think all of these things have been good things, but there have been lots of loopholes. There have been people who have flagrantly ignored those norms. There have been people who have tried and failed to enforce them. But implementing those norms in a fair way through multilateral organisations has to be the right starting point. We'll continue to live in a world with limited compliance, but the the aim is to increase the cost – reputational, financial, legal – to people who don't comply. Maybe there could be countries that you could hide in, you know, maybe North Korea won't sign up and you'd be welcomed there. But you're making it less attractive. Really that's what the law is trying to do, isn't it. You can burst into someone's house and steal everything in that, but it's not a very attractive profession in countries with a good rule of law. So we're trying to increase the level of the rule of law of the world from a very low level to just a little bit better. And you can be sure that there'll still be plenty of breaches.

Heba Aly  

You talked about the opposition of the US, UK, EU. What lessons can we learn from the fact that this resolution did get through despite their opposition? Or is it one thing to pass a resolution and another thing to actually implement it? 

Hassan Damluji  

They are different things. But if you go back, you know, 20 years, the GDP of the G7 was 40 per cent of global GDP, and it's now gone down to 27 per cent. In 1950, as a data point, US GDP was half of the world's GDP at that point. So there have been extraordinary changes, some quite fast, some a little bit more subtle. But when you look back over 60 years when this process began, we’re in a very different world. When the OECD started having these negotiations, many countries were colonies. And so, there is a fundamental shift of power going on, but the problem that humanitarians will be well aware of when it comes to the conflicts that are ongoing in the world, is that most of the countries that have been steadily growing in their power have not been flexing it in a positive way through multilateralism in the international sphere. They may be flexing it somewhat. Often they're husbanding that power, because they're still not the richest countries in the world, these upper-middle-income countries. And so in many spheres, it is still America, it is still European countries that rule the roost in the international system. I think what you're seeing with this international tax vote, is the increasing signs of the creaking-ness of that system. Increasing signs that countries are not happy with the status quo. What's not the case, however, is that this is a system that can make real progress without the most powerful countries at the table. So they are forced to listen to them. But we still live in a world of extraordinary imbalance of power, it's just getting harder for America to ignore the rest of the world. So the hope would be that on this relatively minor issue in the grand scheme of things, they will accept moving this issue from being an OECD issue to being a UN issue. And that'll be a big win for the Global South, and saying ‘No, this system should be according to our according needs, and not just yours.’ What the Americans and the Europeans will say is, ‘Well, the OECD, there's a lot more efficiency, the G20, there's a lot more efficiency, because you have a limited number of countries, and you can negotiate more effectively because I don't have to satisfy every single one of the 194 members of the UN.’ That will be their claim. But let's see. Let's see if they will actually really listen and do things differently and not just kill the process.

Melissa Fundira  

As you mentioned, putting forward a global tax treaty, whether it's to tax individual wealth or corporations, is going to take an extraordinary amount of global cooperation to push through. But another factor to consider in 2024, for sure, is the fact that there are more than 60 elections that will be held, not to mention in the US. There are there is the growing rise of right-wing governments in Europe and in North America as well. And these are governments that usually want to reduce taxes. These are governments whose tax agendas are quite different from what you're proposing with tax justice. Can global tax justice policies, or a UN tax convention, really succeed in an environment like that?

Hassan Damluji  

I don't think that any of this requires high-income countries, on the whole, to increase taxation overall. It is quite possible to implement a taxation on wealth and to use that revenue to reduce taxation on other things. What you're doing is you're making the system fairer, because right now, everyone pays sales tax to buy – you know, even the very poor – pay sales tax to buy basic things that they need for their lives, often at a very high rate, and the wealthiest people are essentially paying nothing at all, right. So all you're doing is shifting the tax in a way that's visibly fairer. Now…

Heba Aly  

But the reality is that the business people are the ones who have an influence on politics, and that's the ones that the politicians are catering to, no?

Hassan Damluji  

I totally agree with you. But I did want to push back on the idea that what I'm calling for is an increase in taxes everywhere. There are countries, predominantly very small ones, who would just need to increase their taxes because, essentially, their taxes are zero, and because what they're living off is the fact that they have very wealthy people living there, and then the crumbs off the table of that is enough to keep the state going. They don't really need, actually, to tax people. That would need to change. But that's nothing like what the situation is in any major economies. Your right, anything like cooperation sounds like the wrong thing to certain political ears. And anything like taxing the rich sounds like the wrong thing to certain political ears. I think it would be difficult to make progress on this issue with Donald Trump in the White House. He's demonstrated in his last term that he wants to reduce taxes on the very wealthy, even at the expense of many people in his base who aren't wealthy. But he's figured out a way of satisfying different audiences. So it's unlikely that you'd make progress there. But there's nothing about being fiscally conservative that means you have to reject these plans. And that's an opportunity there. There should be and can be a consensus across left and right, especially outside America. You see, the thing about America is, many of these massive multinational companies that are making money all over the world and paying tax nowhere, actually, are American companies. And so this tax justice thing feels like a threat, certainly to American corporations, and to people who support them, whether they're influenced by their lobbying, or whether it's just they feel a certain pride of being from the same country as them. And so, therefore, there's a strong opposition in America. Whereas if you're a right-wing nationalist in other countries, you would say, “I don't want Amazon coming here and not paying any tax,” right? You would be quite happy with shutting down that behaviour. So there's a special issue in America, but actually, in many countries, your sort of narrow nationalist point of view is actually very angry that some of these multinationals aren't paying tax. So the proportion of the global population and elites that can be won over to this issue is very high, and that's precisely why so much progress has been made.

Melissa Fundira  

In a world, a hopeful world, where the tax justice movement continues to gain momentum and tax leakages are reduced and could be used to finance aid, as you argued, is there any precedent for this? Have fairer tax laws or tax policies been used to fund humanitarian needs in the past?

Hassan Damluji 

I don't think there are a large number of examples, but the one that I'm most familiar with is in South Korea, where a tax on aviation was for many years hypothecated against contributions to global health, which is connected to humanitarianism, although it would be in the bracket of development more than emergency response. Hypothecated taxes in general have their downsides, partly because it ties the hands of governments. And if that tax were to fluctuate, it's going to create fluctuations in your budget for that thing that you're trying to spend the money on. And so what you found that really kind of broke that in Korea, was that in a context that Korea wanted to increase their aid, and they wanted to increase their global health, in the pandemic, obviously, planes weren't flying, and the revenue from that tax crashed. And so they made a great decision to continue funding and not just to slash or their global health budget, but at that point, the link between that revenue and that expenditure is broken. The thing about hypothecating at such a large level of, let's say 0.25% of all of the wealth of citizens over a million dollars should pay for all global development and humanitarian [aid], is that wealth is not going to fluctuate the way that airline flights do. And you could then spend that relatively large amount of money on anything that was the right priority – humanitarian this year, fewer crises next year, maybe we can invest more in global health.

Heba Aly  

To what extent do you think humanitarians have a role to play in pushing for global tax justice or being part of this movement?

Hassan Damluji  

Yeah, it's a great question. I think it's really important for the following reasons. The French Revolution, the American Revolution, the overthrow of the Prime Minister of Pakistan because of the Panama Papers, more recently, are all examples of how the sense in which people are escaping tax can really turn the tide of politics and create momentum for a fairer world. But only if people actually care. And this debate about international tax justice has not just been marginal, in terms of the general public, t's been marginal within development and humanitarian spaces in which we reside. And we've got to take it from being seen as a kind of nerdy interest of some people, some practitioners, to being a really big issue that will pay if we're successful for everything we want to do in humanitarianism and beyond. And that is extraordinarily unfair, that the money that is being pooled for our common purpose is not being paid for fairly. And that there's progress to fix it. So it's a perfect issue to say, ‘It's really important. Right now there's a massive problem, and there's momentum to fix it, and it can solve so many things because that's the money that will pay for those things.’ Humanitarians needs to feel part of this movement, they've got to help us find a way of reaching beyond and making this issue exciting again. Taxation feels boring, [but] it couldn't be anything less. It's a huge amount of money. It's the grease of the wheels of a fair society. And so humanitarians need to be calling for that.

Heba Aly  

Nice pitch. I read somewhere that taxation is sexy, and I thought ‘A bit of a stretch, but okay.’

Melissa Fundira  

Well, Hassan, let's say that 2024, global tax treaty comes into effect, Paint me a picture of how you think things would change in the first weeks, months, the first years. How would the world change in your estimation.

Hassan Damluji  

So inevitably, these things take time, but what you would find over the first five years is that there's a lot more money to spend on development and the response to crises by countries in the Global South. Anyone who works in these contexts will know that that is where you want the money to be coming from – country ownership of crisis response, being able to actually build resilient systems for the next time rather than international people who arrived today and go tomorrow, countries being in control of their own development. That's what we've been calling for all of us for so long, and I think over the first five years after a tax treaty, if it were to be complied with, you'd see a real change in that. And especially on the continent of Africa where, today, the losses from taxation and tax avoidance by companies is about half of the domestic health budget of countries in Sub Saharan Africa. So if they chose to spend all of that revenue on health, it would add another half again to their health budgets. I'm sure actually the reality would be it would be spread around across a range of priorities. And I think you'd see the Human Development Index rise. You’d see educational, health, and other indicators just tick upwards over that decade. 

Melissa Fundira  

I read somewhere that the losses to tax havens in 2021 would’ve been enough to vaccinate the world against COVID three times over. So I can only imagine what that impact would be. 

Hassan Damluji  

Absolutely. 

Heba Aly  

I was just gonna say, I think across the podcast, we've been coming back to this idea that humanitarian needs are too high to keep trying to respond to them downstream. And we've been trying to, through the podcast, identify some of the ideas around which to reduce that need upstream. We looked at, for example, how fairer trade terms for crisis-affected countries could be game-changing, and I think this is another example in that realm. Going back to Alvin’s comment off the top, I was really struck that we're asking the wrong questions when we say ‘How do you bring funding into crisis-affected countries rather than how do you stop money from exiting from them?’ So, thanks so much for helping draw that out for us. We really appreciate your time.

Hassan Damluji  

Thanks so much. It's been a pleasure. 

____

Heba Aly

Hassan Damluji is the co-founder of Global Nation, and Alvin Mosioma is an associate director at the Open Society Foundations working on climate, finance and equity.

What are your thoughts on today’s episode?  Write to us or leave us a voice note at [email protected]

Melissa Fundira

The next episode of the podcast, I’m very sad to say, will be Heba’s last. As some of you may know, Heba is stepping down as The New Humanitarian’s CEO. But we will get a chance to say goodbye on this podcast, so stay tuned for our next episode in March. And in the meantime, we’d love for you, the listener, to get a chance to be part of that episode as well. If you have any questions for Heba – reflections on her time covering humanitarian crises, what she’s learned from 4 seasons of hosting Rethinking Humanitarianism, or if you just want to send along a farewell message – you know the drill. Send us a voice note at [email protected]

Heba Aly

In the meantime, today we’ll leave you with a few snippets from this year’s World Economic Forum. Five years after Rutger Bregman’s viral speech, taxes were once again on the agenda at WEF’s annual meeting in Davos. In this exchange, you’ll hear from Allison Schrager, a senior fellow at The Manhattan Institute for Policy Research, and she advocates for a consumption tax, rather than a wealth tax because, as she ses it, wealth is too difficult to measure and taxing wealth in the US is politically unrealistic. But as you’ll here, her fellow co-panelists – interim executive director of Oxfam International, Amitabh Behar, and Sciences Po associate professor, Lucas Chancel – disagree.

Melissa Fundira

This podcast is a production of The New Humanitarian. This episode was hosted by Heba Aly, and me, Melissa Fundira. I also produced and edited the episode. Original music by Whitney Patterson, and sound engineering by Mark Nieto

Heba Aly

Thank you for listening to Rethinking Humanitarianism.

Allison Schrager: My preferred way of taxing the US isn't exactly innovative. I think we should move more towards consumption taxes and away from corporate taxes. Obviously, we need corporate taxes, but the problem with corporate taxes and using those as your main means of raising tax revenue is, often, that burden is borne by the workers [...] It's better to sort of tax consumption, particularly high-end consumption, that way you can be more targeted and get the wealthy because, you know, as much as we would like to get more revenue from the super wealthy, and they certainly can afford to pay a lot more, ot's very challenging to tax their wealth, because wealth is very hard to measure. A lot of their assets are in private entities that are really impossible to value. [...] We might want higher than a 15% tax on corporations, but politically, it's a very hard thing, when you have a lot of countries that have sort of built their economies around being a low tax state. [...] So we have to be realistic, about, you know, what's possible [...] and what's politically feasible.

Amitabh Behar: We know progressive taxation works. And that's something that we are running away from. In the last one decade, corporate taxes have come down 10%, income taxes have gone up by 20%, consumption taxes have gone up by 10%. What are we trying to do? We’re ending up, actually, taxing the workers and common citizens, whereas on the other hand, the super rich continue to go scot free. [...] These corporate monopolies now have so much power, that they're able to even change policies and the economic systems. And that's extremely worrying for any democratic society.

Lucas Chancel: Very quick response to the argument that it's actually too complicated to tax wealth, that we should tax consumption…

Allison Schrager: I didn't say complicated.

Lucas Chancel: Difficult. Complicated. Hard to measure. Well, there are a lot of businesses in this world that, actually, their daily business is about estimating the value of other businesses. So if we're not able to measure the wealth of businesses and of individuals in this data intensive world, there's some kind of an issue. And the other argument here is [...] if we start to tax consumption, as was just said before, this is really the very thing that, from my perspective, contributes to undermine trust, because taxes and consumption we know, are very often very regressive. That is, they fall much more on those who have the least resources, and the very wealthy are able to have a very small tax burden when we have a tax system that relies essentially on consumption taxes.