Tove Maria Ryding: Untangling the Global Tax Web

In this episode of the SystemShift podcast, Tove Maria Ryding from the European Network on Debt and Development (Eurodad) joins us for a thought-provoking discussion on the crucial need for a UN tax convention.

Delving into the intersection of tax and environmental issues, Tove looks at the principles that should guide the establishment of a fair global tax system. She emphasises the importance of preventing countries from becoming tax havens, ensuring accountability in tax spending, and simplifying the complex network of international tax treaties. The episode explores the impact on small and medium enterprises, the ongoing UN negotiations for a tax convention, and the potential contributions of tax reforms to a wellbeing economy.

Listeners are encouraged to take action and demand accountability from their politicians, shedding light on the groundbreaking developments in the push for a fair and effective global tax system. Tune in to gain insights into the complexities of the current tax landscape and discover how individuals can play a role in shaping a more equitable future.

Voiceover 1:
I think it’s unfair that the rich get to stay rich, and they don’t pay enough taxes. That constantly enforcing all of the scummy laws on people who make less money.

Voiceover 2:
I feel enraged, and I laugh about it because what you’re going to do, cry? It’s like everyone wants a cut of me working hard for these people. That some point they forgot where they came from and that just making money on money and money, and no one cares. My dad always said that law is something that applies to the poor. 

Voiceover 3:
People in charge are the ones that make the safe havens, the ones who have the money and the ones who are friends with the ones that have the money are the ones that are in charge of the country. They’re the ones putting all of the profits away in Ireland and Switzerland and all of these wonderful little safe havens to keep all of their money away from our roads, our infrastructure, our schools. We just actually tax them and held responsible legally. We might actually get something done.

Carl Schlyter: 
Taxes, a subject that most of us find boring and one that will keep only hardcore neoliberals awake, all night. While taxes might not be everyone’s favourite conversation topic. People around the world are increasingly aware of the need for a fair and just global taxation.

There is a growing sense that the current system has its flaws, allowing the wealthiest to exploit loopholes while regular citizens bear the burden. Welcome to another episode of SystemShift, a podcast that explores some of the pressing issues reshaping our world. Today we dive deep into the complexities of the global tax system with our expert guest Tove Maria Ryding, a leading advocate for global tax reform Tove which brings a wealth of knowledge and experience to the table. She is a senior policy analyst at Eurodad, at the European Network on Debt and Development, and she’s also on the coordinating committee of the Global Alliance for Tax Justice. In this episode Tove looks at how we can use the tax system to promote environmental protection, tackle inequality and empower countries to shape their own tax regimes. From dismantling wealth taxes to addressing the challenges of corporate tax rates. Tove lays out a comprehensive plan for a fairer and more transparent global tax landscape. So whether you’re passionate about economic justice, intrigued by international policy, or just love taxes; Toves vision for a fair and just world economy might just reshape your perspective. So without further ado, a warm welcome to you Tove.

Tove Maria Ryding:
Thank you so much, and thank you for having me.

Carl Schlyter: 
Yeah, we are going to talk about everybody’s dream subject – taxes. But, actually from a really interesting perspective so don’t hang up now, people. We are going to talk about tax policy, which sometimes scare people away and make people upset in all different ways. But I think most upsetting of all is how it’s so unequal, dependent on who you are. So let’s do a role play. You and I are billionaires and we want to avoid tax. So, hello to Tove, what are you doing this week?

Tove Maria Ryding:
I am flying off to Bahamas for my board meeting.

Carl Schlyter: 
And I hope you take your private jet so you don’t pay any taxes?

Tove Maria Ryding:
Yeah. No, PricewaterhouseCoopers helped me structure it, I’m all good.

Carl Schlyter: 
Okay, and do you have a good holding company there so you can avoid the rest of the taxes? Is based in Denmark, or?

Tove Maria Ryding:
Oh, one is not going to do I have a whole sandwich of them. I’m set.

Carl Schlyter: 
Good, so you’re going to keep every single dime, are you?

Tove Maria Ryding:
I think my secretary’s going to have to pay a bit of tax, but from my own private part, I am all set.

Carl Schlyter: 
Sounds good to hear. I got a hiccup with some of my structured combination of the Irish Dutch sandwich last week, so I was a bit worried. I had to pay some, but I think I got it clean sweep in the end.

Tove Maria Ryding:
You need to watch out. The rules are changing fast, but, the big four accounting companies will keep track of it and help you find the new loopholes. Usually when they close one, they’ll open a new for you. So don’t worry.

Carl Schlyter: 
I know it’s just a pain that, I don’t pay the taxes, but I have to pay consultancy fees, and that is annoying. You know. 

Tove Maria Ryding:
That is the best investment of your life.

Carl Schlyter: 
Yeah. I’m good. We are clear on that, at least. So let’s, meet on my Yacht in Malta because I got a new tax deduction from it there.

Tove Maria Ryding:
Excellent. Mine is parked in the same place. I hope you don’t pay more than 5% in tax. Because if you do, you need a bigger boat.

Carl Schlyter: 
Sorry, only idiots pay more than 5% taxes, you know.

Tove Maria Ryding:
That’s true. Idiots and poor people.

Carl Schlyter: Oh, yeah, and that’s actually you and me in reality Tove, like the rest of us. So, this little chat here could actually have been for real.

Tove Maria Ryding:
It could, yes.

Carl Schlyter: 
Because it’s easy to do so. I saw a whole page when preparing for this episode where I wasn’t sure on which side they were on, but it was how to avoid taxes, tax planning homepage. And like they were so open with what they are doing.

Tove Maria Ryding:
Yep. We do this civil society when we research the tax system, we go to all the websites of the tax lawyers and the big four accounting companies. And yes, they provide very open advice to attract customers. 

Carl Schlyter: 
And this is what this episode is going to be about, how we stop these people from having the discussion we just had, how we prevent these loopholes and how we can have a global agreement that actually fixes this extreme inequality in not only within countries, but between countries. So, a warm welcome to you Tove.

Tove Maria Ryding:
Thank you so much. And it is an extremely confusing system. And the problem we have is that the world’s wealthiest people and big multinational corporations, they have managed to turn this complete spaghetti of international agreements into an advantage. They use it to find loopholes, but for ordinary people, it’s just plain chaos. And so, it’s very obviously in our interest to create a coherent global system.  

So, they’re basically just becoming a bit disconnected. If we would have a global agreement, the countries can join and there you have a basic set of international rules that allows things like international transfers to be managed in a coherent way. It would be a huge advantage to ordinary people, but also means that we can close some of all the loopholes and get rid of tax havens. 

Carl Schlyter: 
There are several layers of inequality when it comes to tax negotiations and tax treaty negotiations. If you have a network of 3000 bilateral tax treaties, you have international agreements, you have trade agreements, you have tax havens, and you have very complicated laws for a company, ownership structures such as holding companies and so on. And then you can use trust-funds and trusts and different tax havens. A person that has all the lawyers accessible, they can more or less decide their own tax level then on their profits? 

Tove Maria Ryding:
This is something that we’ve seen. And there’s also another part of it, which is that over the last 50 years, governments have largely started giving up on taxing wealth and taxing corporate profits. And one of the things we’ve seen is that the number of wealth taxes, the number of countries that use wealth taxes has dropped, a lot of countries have just given up. It’s too difficult to tax wealth because private individuals are very good at using these international structures. And the same for the corporate tax rate. in the 80s, we had an average global corporate tax rate that was above 40%. Now it’s down to 25%. And that’s just looking at the headline rate. If you look at what corporations are effectively paying, it’s actually even less. So, the problem is also that governments are starting to give up on taxing the world’s wealthiest individuals and corporations. What is the difference between a nominal corporation tax rate and an effective corporation tax rate? I think one of the best ways of illustrating the difference is that we have some of the countries in Europe that we would call tax havens, such as Luxembourg and Netherlands and Ireland. They actually have pretty high taxes on corporate profits. They just don’t apply it. They have different types of rules describing why these profits shouldn’t be taxed for that reason. And this needs to be exempt for another reason. And so, we there you have an effective rate that is much lower than the official rate. And that to make things worse, it means that there’s a lot of room for negotiation. So actually, we have a very substantial part of the corporate tax system that is settled through secret deals. 

Carl Schlyter: 
And this is for the strong Western democracies, the whole corporate tax system is also unfair in a different way because we are differently dependent on it. For example, India, Malaysia, Indonesia, they have more than 50% of the tax income from corporate taxes, while the US, UK, France and Germany have less than 10% or around 10%. So, having a reduction in corporate tax income has hugely different impacts on different countries. Isn’t that the case?

Tove Maria Ryding:
Exactly, there are two types of impacts of the broken global tax system. The first one is that inequality within countries increases when ordinary people have to pay their taxes. But the wealthiest and the biggest corporations have found ways to reduce their tax payments. That increases inequality within a country. Then there’s inequality between countries. And this is also a very, very big problem. And especially for the developing countries, corporate tax income, it’s one of the very important sources of income that they have, because they don’t have many different types of income. And so, when the corporate tax system is broken, it has a huge impact, in particular on the poorest countries. But it’s also important to bear in mind that we all pay a price when corporations don’t pay their taxes, it impacts all countries. So even if the richest countries are less impacted, it’s actually an area where most countries around the world could increase their tax income if we fix the global tax system.

Carl Schlyter: 
Yeah, actually, if you see that the tax lost by this advanced tax planning structures and so on, if the total tax is lost here on corporate taxes, if all this money would be collected and then distributed among the world’s poorest people, we would completely eradicate extreme poverty with this money.

Tove Maria Ryding:
Exactly, and that’s where we’re trying to say that the tax debate shouldn’t just be for tax geeks and lawyers and professionals. The tax questions are really important for all of us because if we look at the current situation, our governments have promised they will get rid of poverty, they will ensure health care, they will provide education. They will solve the climate crisis. They’re going to protect nature. And the obvious question is, how are they going to pay for this? And this is a very, very, very difficult question to resolve. You can see in the global climate negotiations that the point where the negotiations always break down is the point who’s going to pay for this? And of course, it’s very important that the richest countries fulfil their commitments to provide support for the poorest countries. But we also have to look at the point that all governments are impacted by international tax dodging. It means that they’re actually all a bit starved of financial resources. If we could fix the tax system, we could boost the availability of public resources all around the world. Imagine how much easier it would be to demand the governments to step in and fund public services and nature protection and so forth, if we actually had more resources to discuss.

Carl Schlyter: 
How come we still have tax treaties written then? Two IMF economists Sebastian Beer and Jan Loeprick calculated that each additional tax treaty concluded by an African country is associated with a 5% reduction in its corporate tax revenues. How come these countries are pressed to continue negotiate agreements and have them in place?

Tove Maria Ryding:
It’s a very interesting situation because some years ago, the IMF actually came out and said that countries should be very cautious when they sign these double tax treaties, and that is interesting to hear from an international organization that has been involved in a lot of controversial policy decisions when it comes to international tax matters and economic issues, but it really shows how desperate the situation is getting. But the reason why developing countries have traditionally been pressured to sign double tax agreements is because they’re told you have to attract international investments. No investors want to come to your country unless you sign these tax agreements. And of course, now we can see the consequence is that these countries have opened themselves up to international tax dodging by signing the treaties that allow big corporations to transfer money out of the country without paying tax. 

Carl Schlyter: 
But we also see a counter tendency here. In the last ten years, Mongolia, Argentina and Rwanda, Senegal, Malawi and Zambia have together repudiated around 11 tax treaties. So, we see also countries going in the other direction.

Tove Maria Ryding:
We do see countries try to stand up and protect their interests and try to collect more taxes. The problem is that when a country like Mongolia or Malawi, they do it on their own. There is a huge pressure on them to stop and to not defend their own interests. And imagine, for example, the type of pressure that a country can come under if the biggest corporations in the country are starting to pressure the government. And then you also have some developed countries, including donor countries, that try to tell the developing countries, no, you need to behave in ways that are gentle and cooperative towards multinational corporations. So, it’s very difficult for developing countries to stand up, on their own. You know, we’re seeing a very interesting new development now, which is that developing countries have started working together as a team. And in particular the African countries. They have teamed up and they’re pushing for what we would call a small revolution. They’re calling for a UN convention on tax. This is good news because individually they can be pressured. When they stand together as a group, they are much stronger.

Carl Schlyter: 
And what was the EU reaction to this initiative?

Tove Maria Ryding:
The EU reaction was to us, a quite big disappointment. What we saw was that the Africa group at the United Nations said it’s completely unacceptable that we’re losing all this money because of international tax dodging and tax havens, and we need to stop it. And of course, as civil society, we couldn’t agree more. We were so happy to hear this. But the EU has been, I mean, there was some newspaper articles quoting developing country negotiators saying the EU was being obstructive in the negotiations and was not negotiating in good faith. And at the end of the day, the EU actually voted no to the proposal from the Africa Group to start the negotiation of a UN tax convention. This is absurd, and not least because we have EU countries, the high tax countries like Denmark and Sweden and Germany and Italy, Spain and France. We have a lot of EU countries that are losing a lot of money because of tax havens.  And it really begs the question, what are you doing? Voting no to a proposal to try and solve the problem of tax havens. 

Carl Schlyter: 
Why are so many? I mean, UK is obviously a specific case because many of the tax havens are territories controlled by them. But for the rest, why do they defend this still?

Tove Maria Ryding:
There are different situations in the different EU countries. One of the things that we have to be aware is that there are some of the EU member states that we would call tax havens like the Netherlands, Luxembourg, Ireland, but also a country like Malta and Cyprus, that there are a few EU countries that have been playing a quite problematic role internationally. So that’s one group of concern, but then we have another country like France, and France is the home country of the OSCD. And what we’ve seen during the last 50 years is that the OECD has tried to set global tax standards. But there’s two reasons why this has been a fiasco. First of all, the OECD is not a global body. They have invited developing countries to come and participate but at the end of the day, countries are not equal at the OECD. 

Carl Schlyter: 
And that’s to say the least. I mean, if you look at the voting power in different OECD and IMF organizations, you can see that the US, UK and EU, they have over 40% of the votes in international Bank for Reconstruction and Development. They have 45% of the votes in International Finance Corporation. They have over 40% in the Multilateral Investment Guarantee Agency. And they have, over 40% an international development association and in IMF. They have over 45% of the votes. While in the UN Assembly, these countries represent 15% of the vote. So you can see that these institutions are far from being democratic on a global perspective.

Tove Maria Ryding:
Exactly, and that’s actually what happened was that, the Africa Group, they took the proposal to the United Nations, and there the principle is one country, one vote. And what happened was with the Africa Group, you have a bit over 50 countries out of 193 UN member states. What happened was that the other developing countries showed up in numbers and supported the Africa group. And so even if the EU and U.S. and Canada and many of the OECD countries voted against the Africa group, we still saw a majority at the UN General Assembly and the Africa Group’s proposal was adopted, which means that they’re now starting the negotiation of a UN convention on Cites, which we think is fantastic news.

Carl Schlyter: 
What would be the difference if you would have a more democratically fair global tax logic compared to today’s logic, dominated by the countries who have so-called shares in the world Bank and so on. And that’s obviously mostly the rich old colonial powers. So how come this would have an impact, so to speak, what would happen if you would have a more democratic global tax regime?

Tove Maria Ryding:
One debate that’s definitely going to come up is where should multinational corporations pay tax? And this is a discussion that goes back over a hundred years. What the OECD countries have said is that, multinational corporations should primarily pay tax in the countries where they have their headquarters. And we’ve actually seen the group of OECD countries expand in recent years. So some of the more, high income developing countries have become members of the OECD, such as Chile and Costa Rica and Colombia. So the group of OECD countries has expanded, but OECD countries are first and foremost developed countries. And the vast majority of the OECD countries are the European developed countries. 

Carl Schlyter: 
How many of the least developed countries, economically developed at least countries are members of OECD?

Tove Maria Ryding:
Absolutely 0% of the least developed countries are OECD member states, and they also have no prospect of becoming members of the OECD. 

Carl Schlyter: 
And obviously they have votes in the UN Assembly so here is a clear difference in who has to say and not? 

Tove Maria Ryding:
There is, and at the UN, where we have one country, one vote, it’s a completely different dynamic. Just the fact that we had the proposal being put forward by the Africa Group working together. This is something that we would never see at the OECD, also, because, half of the African countries never joined their negotiations at the OECD. But in terms of what’s going to happen now, it’s an important point to say that for 100 years, developed and developing countries have been discussing should corporations pay tax in the countries where they have their headquarters, or should they pay tax in the countries where they have their factories and extraction and economic activities? But while this discussion has been going on, what actually happened was that multinational corporations didn’t pay tax in any of those countries because the problem of tax havens emerged. We need a system that taxes multinational corporations based on their global profit. Instead of trying to address this as hundreds of tax systems trying to tax even more subsidiaries of multinational corporations, we’ve seen the OECD try twice to save and solve the global corporate tax system. And indeed first, in 2015, they launched this agreement base erosion and profit shifting. It was fascinating to see an agreement that’s almost 2000 pages long be sold as a simplification. And soon after this agreement came out there were more corporate tax scandals. It’s one of the great things about working on this issue is that you can sit down on your couch and wait, and then there’s going to be another corporate tax scandal, because at the end of the day, when corporations don’t pay any tax, sooner or later it will be found out. And so there was a lot of corporate tax scandals. And then the OCD said, oh, whoops, maybe our solution didn’t solve everything. So they tried to negotiate another, global agreement. And again, it didn’t become global because over a third of the world’s countries didn’t join. But also, fascinatingly, the rules became even more complex, and they still didn’t get rid of the transfer pricing system. They just put some additional rules on top, and there was this absurd moment where we often disagree a lot with the corporate lobby. But on this point, we actually had a joint, talking point, which was, wow, you’re making a messy system even worse. This is really not the way to go. So yeah, the corporate tax system has just gone from confusing to absolute chaos. And the one thing that I am very confident in is that corporate tax avoidance will continue. 

Carl Schlyter: 
But this is something I recognize from trade agreements and so on. Every time we talk about deregulation and free trade, it tends to go from trade agreements on 15 pages to 1500 pages.

Tove Maria Ryding:
Exactly. 

Carl Schlyter: 
So, so-called deregulation and freer trade actually always means more detailed regulation normally, but it benefits the large corporations.

Tove Maria Ryding:
Exactly, but there is one point about the way the OECD negotiations happen that makes this tendency even worse. when the OECD has, international negotiations about the corporate tax rules, then negotiations are completely secret. As a civil society, we’re not allowed to be in the room, and we’re not even allowed to be in the building. The negotiating texts are not public, and they’re only published after they’ve been adopted. And so, it’s very difficult to hold our governments to account. And it’s absurd that you have a situation where we all as normal people, we have to pay more tax or we have to accept a lower level of public service because corporations are not paying. So, we have a very, very strong interest in how these negotiations go. But we’ve been completely shut out. And if you compare that to how negotiations happen at the United Nations, there is a huge difference at the U.N., we can be in the room and the web cameras are on. When there’s meetings, we can see the negotiating texts, and that means that we can hold our governments to account and take a country like Denmark, for example. I would want my country to speak out and try and stop tax havens. It’s very difficult at the OECD when I don’t even know who’s negotiating for Denmark, and even less what they’ve actually said and done. 

Carl Schlyter: 
Well, if you look upon it, the current UN agreements about tax, they say that the governments want a fair, progressive and effective tax system that is vital for the achievement of other UN goals and commitments, and this should be done in transparent way and protecting integrity. How is your judgment though, we have been faring so far on the global tax system compared to these goals?

Tove Maria Ryding:
The results in the global arenas, while the OECD has been in charge are very unimpressive. First of all, there is broad agreement that it’s anything but effective when you have large scale corporate tax avoidance, when you have corporations that pay less than 1% in tax, it’s pretty clear to say that the system is not effective. but the second thing is also that it’s not been fair. It’s been very clear that developing countries haven’t been able to participate effectively. And it goes back to the fight about whether multinational corporations should pay tax in the countries where they have their headquarter or where they do their economic activity. And on that, the OECD agreements have generally fallen out in the favour of the headquarter countries, which means the OECD countries. So, we have a long track record of unfair and ineffective agreements coming from the OECD which is also why we as civil society have said, okay, time for a change, enough of this. 

Carl Schlyter: 
And not only the OECD countries in general, but economically richer OECD countries also. That’s clear that they are the main profiteers of this.

Tove Maria Ryding:
Absolutely, in fact, if you look at the countries in Central and Eastern Europe and let’s take Poland and the Czech Republic and Slovenia and Slovakia and so forth, they don’t have a lot of headquarters of multinational corporations, and therefore they don’t necessarily have the same interests as, the large and rich OECD countries like the US and Canada and France and Germany and so forth. And it’s very clear that within the OECD member states, it has been the big countries that have dominated. And we’ve seen in particular the United States, be extremely influential in the negotiations, even if we haven’t been allowed in the negotiations. We can see from the public debate that the US administration have been making proposals for what the OECD should adopt. And then when you look at the final agreements, it’s quite clear that they did a lot of what the US administration said, absurdly, then the United States was also one of the first countries to say, actually we don’t think we’re going to implement these rules, because Congress doesn’t like them. So, the OECD has been stuck in this absurd political limbo where the biggest member state wrote the rules, but then was also the first one to walk away. 

Carl Schlyter: 
But also, if you talk about inequality, even in these big and strong member states in the OECD, their agreements and their positions are not even beneficial for the average taxpayer in those countries.

Tove Maria Ryding:
Exactly. And that’s one thing we see at the OECD is that while the public and journalists and parliamentarians and civil society have a lot of trouble finding out what’s going on in the negotiations, the same doesn’t seem to be the case for the lobbyists of the big multinational corporations. They seem to have very good connections to the negotiators. When the governments start to become too isolated with the corporate lobby, and the rest of us can’t participate in the democratic process, then the agreements, of course, tend to be very favourable to the large corporations. 

Carl Schlyter: 
Let’s say we have been able to convince everybody here now that the current system is failed, it’s ineffective, it’s unequal, and it has flaws everywhere. It’s undemocratic and non-transparent and it’s all shit. Then I wonder, the African proposal and your organisation yourself have written a proposal, what would change? What are the key changes you’re after there?

Tove Maria Ryding:
Indeed, the African proposal only says that we should start the negotiation of a UN convention towards a fair, effective system. But it’s important to say that the Africans have invited everybody else to sit down at the table and find solutions, but they haven’t come with pre-written agreements and say, sign here. So in that sense, they’re actually behaving better than some of the OECD countries have sometimes behaved. 

Carl Schlyter: 
Most of the times, honestly.

Tove Maria Ryding:
Yeah exactly, but as a civil society, yes, we’ve already taken it a step further and we’ve basically written a full proposal for what an UN convention on text could look like. And the first thing is just to set up a global system where you can make decisions to stop tax havens, but also make decisions that can promote things like progressive tax systems, because governments have actually committed to having progressive tax systems that lower inequality. It’s just not happening. One of the other things that we’re interested in is to have a UN Tax Convention look at issues like, tax and environment. How can you use the tax system to, promote environmental protection? And then we’re trying to introduce very basic principles. And one of the principles that we would like to see is the principle saying one country cannot undermine the tax system of another country. We have this an environment that we have UN agreements saying one country can’t destroy the environmental, integrity of another country. So, we’re saying let’s do the same.

And if you start with a principle like that, you can also see that it’s not okay to be a tax haven.

But we don’t have that at the moment. So this would actually be a step forward. 

Carl Schlyter: 
Another principle is that countries should be able to themselves decide their tax regime. How can you combine these two principles in a good way?

Tove Maria Ryding:
Exactly. We’ve seen, a very good way of combining principles in the UN environmental agreements, because first they say that every country has the right to decide on what to do with its own natural resources. And then it goes on to say, countries also have a responsibility to ensure that they don’t destroy the natural resources or ecosystems of other countries. But even more importantly, we’ve also then had the global goals set that saying while countries can decide on their own natural resources and ecosystems, they also have a basic obligation to not wipe out species and destroy the environment. So, we have these, global rights of governments to make their national decisions that come with global responsibilities. And you could imagine the same on tax, basically saying that, every country has the right to decide on its own tax system, but it also has the obligation to make sure that it doesn’t undermine the tax system of other countries.

And it has the obligation to make sure that it has, ways to stop escalating inequalities. It’s not okay to tax the poor very hard and let the rich get away with being in tax havens. In the debate about getting rid of the wealth taxes, one of the arguments we often see is, well, this tax doesn’t give us much money anyway. And the reason why it doesn’t give much money is because the wealth gets hidden elsewhere. So we’ve seen countries dismantle the wealth tax because it’s simply not possible to have it in an effective way. But the other thing is that we need to look at having a floor on, how low can you go? And basically, the limbo bar has gotten down to a point where many countries opt for a 0% taxes on things like wealth. They basically abolish the wealth tax. And also, on corporate tax. We do have countries that they’re not classic tax havens, but they have very low corporate tax rates. And that’s where we’re discussing minimum taxes. And this was very controversial until a few years ago. But then the OECD started a negotiation about what they call a minimum corporate tax rate of 15%. Now classic OECD, it’s called the minimum effective corporate tax rate of 15%. But the rules actually still allow corporations to pay 0% tax. So again, we have to say it’s a very nice intention. But what you have delivered does not provide the solution that you promised. But at least we have agreement that we can look at minimum taxes. And it’s not to say that the countries shouldn’t go higher, but what we’re looking at is saying, okay, there needs to be a floor on how low you can go. 

Carl Schlyter: 
And would your proposal for a new tax regime, would things become simplified? Maybe we don’t need all the 3000 bilateral tax agreement and so on. And that in itself, how would that affect accountability and democratic influence?

Tove Maria Ryding:
Absolutely. One of the key things we want is to replace the spider web of bilateral international tax treaties with one coherent global system. And what we’re saying is that we’ll have a gradual build up of the new global agreement, but then countries should be obligated to get rid of tax treaties that go against the new rules. And if you look at some of those old tax treaties that were signed between African countries and European countries before the end of colonialism, it’s very clear that there’s a lot of rules that will need to go. But yes, simplification is a key focus. And at the same time, we also propose to change the corporate tax system and throw out this failed transfer pricing system. This is actually one of the points where we think that in the dialog with the EU countries that are not tax havens, we actually were offering something that would be a big step forward for everybody, including multinational corporations. They’re also very tired of all the chaos that the tax system includes today. So yes, simplification making it effective, but also making sure that we stop tax havens and start introducing progressive systems around the world. 

Carl Schlyter: 
But when we see in the global climate negotiations, even oil producing countries, yeah, let’s have a global tax on gasoline because they know that will never, ever happen. Do we have a similar risk here that we see that the UK that defends their tax havens would pretend to play along and negotiate for, and nothing would ever happen? How can we make sure that the African countries initiative, together with other progressive states, would actually make something happen, and just not having a forever limbo where nothing would actually really in the UN take place. How can we avoid such a situation here?

Tove Maria Ryding:
This is a very important question, and one of the things we’ve done is we’ve looked at other UN negotiations that have been about multinational corporations and there is, for example, one, the negotiation of, what’s known as the Nagoya Protocol, and it regulates the pharmaceutical industry. And what started to happen was that developing countries teamed up and they said if the pharmaceutical industry does not start sharing the revenue that they get from genetic resources from our countries that they have patented, if they don’t start sharing the revenue, then those multinational corporations will not be welcome in our countries. And because it was a big group of countries saying, you know what, if we don’t get a fair system, then we’re going to start taking defensive measures on our own. That created the political leverage that, in the end, led to an agreement. And that also shifted the corporate lobby from being against global regulation to actually supporting that some sort of peace deal was made that was going to allow them to access the countries in the Global South. So, because when we look on tax, we actually have a quite positive picture, because most of the tax havens are quite small and the vast majority of the world’s countries are just losing out there, they’re just losing large amounts of resources because of tax havens, and that’s where we see a political potential to have a coalition of countries that are fed up with losing money, and that can create the political shift and the pressure on other countries to cooperate. 

Carl Schlyter: 
Can we also see a similar tendency to where small and medium sized enterprises are losing out to the global, because the global know how to exploit all the loopholes?

Why normal people making normal business locally and regional? Naturally they are losing out.

They don’t have a fair competition because of these regimes. How can they be involved to stand on the side of the African countries and the progressive states?

Tove Maria Ryding:
We actually see it here in Brussels, where I’m based. We see the small and medium enterprises raising concerns, because if you open a coffee shop as an individual, you’re going to have to pay the corporate tax rate on whatever money you make in profit. If a multinational corporation opens up a coffee shop, they can use their international structures to lower their corporate tax rates. So what the small and medium enterprises are saying is this unfair competition. The problem is that in a way, the small and medium enterprises have the same problem as ordinary people. It is that they don’t have the resources to hire the lawyers and lobbyists that you need to match the influence of the large corporate lobby. But this is where the coalition that’s coming together. And this is also a big part of my job and the coalition between all the different actors is important, because working across borders can create a big push from a lot of small fish, if you like, and of course, on the civil society side, what we’re doing now is bringing together all types of organisations. We have, development organisations, environmental organisations, human rights. And we’re also working with the public service unions. But, for small and medium enterprises, it’s also important that they do manage to mobilise the resources that they have and pool them. And then at the UN, I mean, the UN also needs to be under pressure to ensure that we have proper democracy. But at the moment, the potential for influencing the UN, is much better than the OECD. So small and medium enterprises can benefit from that. 

Carl Schlyter:
Now, I have listened to this episode and I want to take action. What shall I demand from my politicians? What shall I demand from my relationship with enterprise and, what can I do to act in the interest of the common good here? And how can we increase the cooperation between progressive people in countries in Global North and South? And this convention, we have been talking about an African initiative. It’s really a nice moment to talk about because of what’s happening now.

Tove Maria Ryding:
Completely, in November last year, the Africa Group managed to get the resolution adopted at the UN, and that resolution says we should start negotiations on the UN’s convention. It’s happening right now. At the end of February, all governments are coming together at the UN discussing how to do a new UN convention, which means a legally binding agreement on tax. 

Carl Schlyter:
So this is another thing people can do now, you can make sure that your government is not running behind the large corporations, but actually defending the public good, the environment and global justice.

Tove Maria Ryding:
Exactly, if you look at the UN, we have the government commitments to provide a lot of very, very good things, starting with the human rights, gender equality and equality, economically speaking, for all of us, education and health care and so forth. And also, on the protection of the environment. We have a lot of global commitments already, but now is the time to remind governments that the commitment also means finding the money for it, and that money should be found in a way that reduces inequality. So that means we have to tax the wealthiest individuals and corporations.  And the last point that we need to debate is also, how do we make sure that the extra money that gets collected in tax also gets spent in a responsible way? So we need to remind governments that they have promised that education and health care and environmental protection and climate action. I think it’s very important when we push for the corporate tax system and the global problems to be resolved. We also need to make sure that we hold governments accountable in the spending of this money. We need to watch them every step of the way.

Carl Schlyter: 
Yeah, and when it comes to environmental taxes, for example, we have been talking about tax and dividend schemes here because if you want to have people accept increased taxes on environmental destruction, people being affected by these taxes should get a way to invest themselves out of the environmental problems that the tax try to address. So if you have a tax and dividend in the fairway, maybe with the countryside and poor people can get a higher share and so on, you will increase acceptability for these kind of tax reforms. This is also need to be made in combination with all the other efforts I assume?

Tove Maria Ryding:
The environmental tax debate is quite absurd at the moment, because there’s a lot of focus on can we tax ordinary people more when they heat up their homes, or can we introduce different types of carbon taxes on transport. At the same time if you look at things like private jets, we have a lot of tax incentives that makes it, from a tax perspective, much cheaper to own a private jet. And it’s actually being sold as a way to structure your wealth. And one of the things that you can consider to lower your tax payments. Even worse, for private yachts, there are systems in Malta that means that the bigger you boat, the lower your tax. So here again, this situation where the wealthiest individuals are getting tax treats that are not available to the rest of us is very, very blatant. And so in the discussion about environmental tax, one of the things that we’re trying to bring up is the point that when it comes to excessive impacts on the environment, when it comes to large scale luxury consumption there, we really need to fix the current situation where the wealthiest pay less than everybody else instead of more.

Carl Schlyter: 
Not only so, ridiculously if you fill up 5000l of gasoline or diesel in your yard or kerosene in your private jet, you pay less tax than if an ordinary person takes five litres in their car.

Tove Maria Ryding:
Yeah, exactly. And the reason, again, is the international loopholes, because the governments argue as well. If we don’t give, a tax benefit to the yacht owners, maybe they’ll sail their boat somewhere else. 

Carl Schlyter: 
That would be so tragic. 

Tove Maria Ryding:
So, the environmental tax debate it’s the same picture that we see in the whole tax discussion is basically that the wealthiest individuals are seeing international loopholes that are not available to the rest of us. And, we need to fix this. 

Carl Schlyter: 
So the wealthier you are, the less capacity you have to pay any tax at all.

Tove Maria Ryding:
Yeah, that’s the current situation. It doesn’t have to be like that. But if we don’t keep an eye on our governments, then there’s a huge risk that this UN negotiation is not going to give us success. So, it’s really time for us to get to work, though. 

Carl Schlyter: 
All what you mentioned here actually sounds a lot like this season’s focus on the wellbeing economy. How could a tax reform contribute to a wellbeing economy you think?

Tove Maria Ryding:
In a wellbeing economy there is a very, very big role to play for the public sector, both as an equaliser, we see the public sector playing a key role in affordable health care, and childcare, and care for the elderly and in education. So basically, if you imagine a wellbeing economy and that also needs to be with the public services, that can make sure that we have the basic things that we need. In a wellbeing economy, because the government has a lot of services to provide. It also means that we need the tax income to make sure that we can fund that. 

Carl Schlyter: 
And also, how the tax is generated could of course, also contribute to a wellbeing economy, because if you have reduced inequality, that also makes people happier and, feel better. We have in the first season an episode on that with Wilkinson & Pickett, that in itself is beneficial for a wellbeing economy.

Tove Maria Ryding:
Exactly. And if you look at the wellbeing economy as opposed to what we have at the moment, the cost-of-living crisis is one of the most recent symptoms that we have a very fragile system that often entails different types of social problems. And the problem we have is that when the world’s wealthiest and biggest corporations can escape the tax system, governments often turn to those who can’t run away, and that means the consumers and the supermarkets so we get consumption taxes like value added tax. And that also means ordinary workers. And so the rest of us actually risk getting taxed more when the richest don’t pay, or we risk seeing austerity where education and health care and so forth gets cut. So indeed, if you get the tax system wrong, you will see inequality rising. But the whole basis for a wellbeing economy is also going to disappear. 

Carl Schlyter: 
And that itself has a negative impact on the political spectrum, because when you pit one against another in the economy, you will have extreme right and populist parties rising, of course. 

Tove Maria Ryding:
There is more and more research coming on the links between inequality and right-wing populism. This is definitely a risk to be highly aware of. And the other thing is that our whole democratic system gets undermined because when you have extremely wealthy people and corporations, they can also influence politicians in ways that other people can’t. 

Carl Schlyter: 
So this link between wellbeing, economy and a fair tax system should be fixed, and it’s funny because that’s exactly the language United Nations use what they want to achieve, but so far completely failed one can say.

Tove Maria Ryding:
Yes, and there are reasons for that. The first thing is that at the United Nations, we only get the progress that we work for. There’s a very important job in holding our governments to account and pressure them to deliver. So that’s the first thing. But the second thing is that they ever since, developing countries started becoming independent in the 60s, there’s been a big push against having the United Nations discuss money, anything economic, be it tax or debt or economic governance, the OECD countries have done a lot to try and pull those issues away from the United Nations. So in a sense, the UN gets to decide on development and human rights and environment, but they don’t get to discuss money and that’s what we’re trying to change now by bringing back the issue of tax to the United Nations, we’re actually making it possible to include the question, how do we fund all of these commitments?

Carl Schlyter: 
So, this new negotiation is actually ground breaking. I wish you all the best here.

Tove Maria Ryding:
Thank you so much. It is indeed.