Spotlight Papers on EPA & Tax system: double role of the EU

CONCORD, the European NGO confederation for relief and development published its first two PCD Spotlight papers of 2015, the first on the Economic Partnership Agreement between the European Union and West Africa and the second on the reform of the international tax system. The FMS is a member of the PCD working group of CONCORD.

While it normally publishes one spotlight paper every two years, in light of the European Year for Development Concord this year publishes a series of papers. These papers centre around the concept of policy coherence for development, one of the central priorities of CONCORD and its members. In these reports, they monitor the coherence of certain EU policies related to development objectives and show incoherencies in and between many EU policies.

The spotlight report on the EPA with West Africa has a central message that West Africa does not benefit from the agreement as much as the EU does itself. The EPA will leave West Africa less policy space to use important tools for the development of certain economic sectors, which will make it more difficult to improve the living conditions of its people. At the same time, the EU has not undertaken any formal commitment to long term funding that would enable West Africa to cope with competition from imported European products and compensate for the loss of fiscal revenues. The report therefore concludes that the EPA is incoherent with the development of West Africa and recommends Members of the European Parliament not to ratify the EPA. You can read the full report here.

The second report focuses on the international tax system ahead of the Addis Ababa international conference for financing for development, and the reforms that are needed to ensure global tax justice. Domestic resources such as taxation are the most important source of income for developing countries, crucial for the provision of services and social development. It has been widely criticized that European companies fail to pay taxes in certain situations, for example in the extractive industries. This way, countries in Africa do not reap the benefits of their natural resource wealth. According to the report, the EU plays a double role: on the one hand it is a major donor emphasising the importance of domestic resource mobilization, and on the other hand some of the policies of its member states facilitate tax avoidance and evasion. Therefore, the EU is a powerful player and the position it chooses now in this debate is crucial to ensure a positive outcome at the conference.

The report argues that taxation is a critical piece of the puzzle to fill the existing gap between the money needed to finance meeting the Sustainable Development Goals and the current level of public and private financing. It recommends that the EU pushes for the establishment of a new intergovernmental UN body on international cooperation on tax matters, for this to have a mandate to oblige multinationals to public country-by-country reporting and provide resources to allow it to function effectively, to assist developing countries in achieving the necessary capacity and expertise to comply with automatic information exchange and to ensure that the concept of PCD is strongly reflected in its position on tax and operationalized by an assessment of the impact of any new tax legislation on developing countries. You can read the full report here.

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