ICRIT Letter To UN Committee Of Experts On International Tax Cooperation

Dear Ms. Liselott Kana and Mr. Mathew Gbonjubola,

We commend the UN Tax Committee for their valuable work in producing international tax standards that are responsive to the needs of the times, such as Article 12B on taxing the digital economy, the Subject to Tax Rule for ensuring minimum taxation in tax treaties, and so on. The recent work of the UN Tax Committee in the taxation of wealth is another highly welcome development, especially given that we are living in times of historically unprecedented wealth inequality. As has rightly been observed by the Committee, there is a strong need by countries for technical guidance in ‘how to’ design wealth taxes so they can be effective. Because wealth can be easily shifted from one country to another, and there therefore can arise cross-border externalities, wealth taxation is a particularly appropriate topic to be discussed by your Committee and we welcome the progress you have made.

We welcome the UN Tax Committee’s draft guidance on the taxation of wealth and look forward to its approval in this session. It will be a useful tool for all countries. However, we would like to emphasize that the guidance by itself is not enough. Resource constrained tax administrations, especially in developing countries, may find it hard to absorb the 100+ pages of guidance and translate those into domestic law.

For this reason, we note that developing country Members of the Committee have been consistently calling for a UN Model Wealth Tax Law based on the guidance which can be a readymade tool that countries can use and customize to their contexts. We are pleased to observe that a first draft of the outline of this Model Law has been prepared and the Committee’s clearance is required to proceed with commencing work on it.

We call on the UN Tax Committee Members to support the preparation of a UN Model Wealth Tax Law in this 28th Session, as it can greatly accelerate and facilitate the adoption of wealth taxes around the world. This is an urgent requirement to address the extreme concentration of wealth today. We also welcome the proposed timeline to have the first draft of the entire Model Law ready by this October with a view to finalizing it by March 2025.

The speedy completion of this work will result in an essential tool for all countries, both developed and developing, to curtail inequality and generate much needed revenues for the SDGs.

Yours faithfully, Jayati Ghosh (ICRICT co-chair) and Joseph Stiglitz (ICRICT co-chair)