The fight against the pandemic and implementation of recovery policies necessitated unprecedented levels of public financing to fund social protection, employment schemes and stimuli to economies whilst public debt has been increasing. Political elites more and more accept the vision that sustainable development is hindered by inequalities, lack of public control over private corporations and social exclusion. The decisions to introduce global taxation rules for transnational actors, growing support for fight against tax-havens and grey tax optimization schemes as well as attempts to control tech giants are the right steps to address the regulatory gaps and restore public control over the economic space.
The ITUC/PERC commissioned research to analyze the financing for recovery and social protection measures taken by some countries in support of fair taxation demands. The G20 agreed on a 15% corporate tax. The unions are at the forefront for just redistribution of wealth and fair taxation. The Global Tax Forum took place in June 2022.
The workshop aimed to equip member organisations with arguments for the development and implementation of policies for financing social protection and public investments in industrial transformation, but also for combatting working poverty and wealth distribution.
ITUC Deputy General Secretary Owen Tudor presented the crucial role of fiscal justice in the building of the New Social Contract – the key demand of global trade union movement, ITUC / Global Unions agenda in enacting global tax rules for MNEs, within G7 and G20 global groupings and beyond. Matthieu Méaulle, ETUC Adviser, present debates on fiscal policies within the European Union.
Severine Pickard, consultant of Progressive Policies, presented research about tax policies in SEE countries. The report concluded that the tax distribution is particularly unfair in the Western Balkans, with heavy reliance on VAT and social security contributions, which themselves are borne more heavily by employees than businesses. In contrast, revenues from higher incomes and capital are relatively sheltered. The main recommendations therefore consist in increasing the effective taxation of corporate profits as well as the progressivity of personal income taxes. Government accountability should also be improved through higher tax transparency and more open and inclusive policy-making.
Evelyn Astor of the ITUC Economic and Social Policies department, presented another report implemented in the Eastern Europe - Fiscal reforms that fall flat? The report focused on regressive fiscal reforms that were implemented in Georgia, Moldova, Ukraine and Romania by promoting flat tax rate and decrease of employers’ social contributions. The case studies demonstrated that the promised positive impacts on the formalisation of the labour market, the expansion of the tax base and economic growth have not been delivered. Furthermore, the sustainability of the pension budget and the adequacy of benefits was undermined. Beyond a seeming failure to stimulate economies and labour markets in the way advocates hoped, the reforms have also generated net social harms.
In discussion the participants highlighted:
the need for coordinated cross-border trade union approach in the field of fiscal policies, similar to the minimal wage campaign, to fight down-to-bottom competition for investments;
the tax free and low tax corporate policies did not bring investors as those are guided by other missing factors (rule of law, fair competition, fight with corruption), but shrank public finances, depressed salaries and social protection funds;
the emergence of progressive approaches – in contrast to previously untouchable neo-liberal orthodoxy - with e.g. ambitious reforms already initiated in Montenegro, to close social protection gaps, but also to fight with capital and human capital outflows;
enactment of global rules and minimal corporate taxation would prompt competition between the states in relation to legal jurisdictions where MNE will be paying taxes due and that would reinforce national unions plea to end “special arrangements” (special economic zones, zero-tax parks etc.);
the need to pursue dialog with the IFIs on national fiscal policies.
