The article discusses a historic opportunity to reform the global tax system through the upcoming UN Tax Convention, aimed at establishing an “international tax system for sustainable development” by 2027. This initiative seeks to create binding global rules for equitable taxation of multinational corporations and the ultra-rich, promoting sustainable development and environmental protection.
The need for this reform is underscored by the exploitation of public finances by large corporations and wealthy individuals, particularly those responsible for the climate crisis. These entities often evade taxation, undermining efforts to fund climate action in developing nations. Implementing progressive taxation and tackling illicit financial flows could enhance resource mobilization in the Global South, while the Global North must fulfill its climate finance obligations in return.
Current international tax rules, especially concerning extractive industries, exacerbate inequalities and deprive developing nations of crucial revenues. The article highlights that global tax losses in the extractive sector are estimated at $44 billion annually, with significant losses affecting low-income countries. Meanwhile, fossil fuel companies have reported record profits, yet there is no global initiative to impose a permanent tax on these profits.
Environmental taxation largely targets consumers rather than the core issues of polluting industries, which necessitates a permanent pollution surcharge to reallocate some profits towards sustainable practices. The richest 1% significantly contribute to global carbon emissions, underscoring the need for them to pay taxes commensurate with their wealth to support climate initiatives.
Ultimately, the article emphasizes that tax justice and climate justice are intertwined, advocating for a comprehensive global agreement through the UN Tax Convention that addresses both issues effectively.
