April 11 2016
The head of the International Monetary Fund (IMF) has said it is time to “think outside the box” on global tax but warned that a proposal by Oxfam to establish a UN global tax body faces huge obstacles.
The British-based charity first put the idea forward last year, arguing that powerful countries write the rules on tax and take advantage of loopholes and offshore tax havens. It suggested that an independent entity could give everyone – rich and poor – an equal say. The issue is now back in the spotlight after the Panama Papers leak exposed how the elite conceal their wealth and prompted Barack Obama to call for international tax reform to ensure that “everyone pays their fair share”.
Christine Lagarde, managing director of the IMF, replied that she had not seen it but acknowledged: “I think it’s an area where we all have to think outside the box because there are too many boxes in that tax field and thinking outside the box might be of great interest.”
She warned, however, that nation states would be unwilling to surrender their tax powers to the UN.
“We need to be aware of the massive hurdles and obstacles along the way because taxation for the last century or so has been defined, conceptualised, designed, implemented on a purely territorial sovereign basis. And if anything, levying taxation is considered as an attribute of sovereignty, and anything that takes away from that is going to be very strongly opposed by many countries in the world, many forces.”