Day: 13 October 2021

The Emissions Reduction Plan is a hodgepodge of responses from Ministers, some of whom appear to not be grappling with the very real urgency of climate breakdown, says Oxfam Aotearoa Campaign Lead Alex Johnston.

“Taking nine months to come up with a discussion document about making yet another strategy is not acceptable. With COP26 less than a month away, the government clearly isn’t taking the climate crisis with the urgency required to keep a safe climate future within reach. Aotearoa needs to do more to achieve its fair share of keeping to 1.5 degrees.

“We think of our friends, colleagues and loved ones in the Pacific and beyond who will have to continue to endure rising poverty and hunger, farmers who are losing crops, family homes being destroyed by rising sea levels, and loss of their whenua and culture.

“We urge the Prime Minister to exert leadership within the Climate Change Response Ministerial Group to get Ministers to come back to the table with policy levers that will reduce emissions further and faster, while leaving no one behind. Every sector has to play its part – this includes our agriculture sector which is responsible for half of our emissions profile, but has no new reductions forecasted before 2025. He Waka Eke Noa is not going to meet the target the Government has set itself. The handbrakes need to be taken off now to allow agriculture to play its part in our collective effort to reduce emissions.

“We call on the Government to support farmers to adopt regenerative farming practices that restore soil, water and air quality, including funding to help them do this; to bring forward the pricing of agricultural emissions in the ETS; and to phase out the use of synthetic nitrogen fertiliser, which has fuelled the growth in the dairy cow numbers over the past three decades.

“It is obvious that there is a missing link between the Draft Plan and level of emissions allowed in the proposed emissions budgets. There is also a huge gap between the plan, emissions and what is needed to step up our international commitments by 2030 to keep to 1.5 degrees. Much bolder action is needed to allow our domestic plan to do more of the heavy lifting in meeting our international target, which itself is too low.

“Taking bold action to reduce climate pollution is still the best opportunity we have to create a just, inclusive and sustainable world where people and planet thrive. The solutions are in our reach, and the public will back Aotearoa playing its part to make that a reality.”

In response to the OECD’s tax deal announced today, Oxfam’s Tax Policy Lead Susana Ruiz said: “Today’s tax deal was meant to end tax havens for good. Instead it was written by them.”

“This deal is a shameful and dangerous capitulation to the low-tax model of nations like Ireland. It is a mockery of fairness that robs pandemic-ravaged developing countries of badly needed revenue for hospitals and teachers and better jobs. The world is experiencing the largest increase in poverty in decades and a massive explosion in inequality but this deal will do little or nothing to halt either. Instead, it is already being seen by some wealthy nations as an excuse to cut domestic corporate tax rates, risking a new race to the bottom.

“Calling this deal ‘historic’ is hypocritical and does not hold up to even the most minor scrutiny. The tax devil is in the details, including a complex web of exemptions that could let big offenders like Amazon off the hook. At the last minute a colossal 10-year grace period was slapped onto the global corporate tax of 15 percent, and additional loopholes leave it with practically no teeth.

“This deal is an unacceptable injustice. It needs a complete overhaul. The OECD and the G20 must bring fairness and ambition back to the table and deliver a tax plan that won’t leave the rest of the world to pick up their crumbs and scraps.”

Notes to editor

140 countries have been negotiating the two-pillar tax framework under the OECD-G20 umbrella. The first ‘pillar’ aims to make the world’s largest corporations pay more taxes in the country where they earn profits. Based on current proposals, Oxfam estimates that it will affect only 69 multinationals and would only apply on ‘super profits’ above 10 percent. Loopholes could let the likes of Amazon and ‘onshore’ secrecy jurisdictions like the City of London off the hook. Extractives and regulated financial services are excluded from the deal.

New analysis by Oxfam estimates that 52 developing countries would receive around 0.025 percent of their collective GDP in additional annual tax revenue from the ‘Pillar One’ proposal endorsed today.

The second ‘pillar’ seeks a global minimum corporate tax rate. The OECD tax plan dropped “at least” from a proposed minimum global corporate tax rate of “at least 15 percent” and further delayed its full implementation from the previously planned 5 years to 10 years.

The 15 percent rate is well below the UN Financial Accountability, Transparency and Integrity (FACTI) Panel recommendation made earlier this year, which called for a 20- to 30-percent global corporate tax on profits. The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has called for a 25 percent global minimum tax to be applied. 

A 25 percent global minimum corporate tax rate would raise nearly $17 billion more for the world’s 38 poorest countries (for which data is available) than a 15 percent rate. These countries are home to 38.6 percent of the world’s population.

Developing countries are more heavily reliant on corporate tax. In 2018, African countries raised 19 percent of their overall revenue from corporate tax, compared to just 10 percent for OECD nations.

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