ISLAMABAD: Prime Minister Imran Khan stressed on the need for the implementation of the Final Report of the High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Development Agenda (FACTI Panel) to stem the illicit outflow of money — which he said amounts to $1 trillion every year — from developing countries to tax havens.
The prime minister’s remarks came during the World Leaders Summit Dialogue organised by the United Nations Conference on Trade and Development (UNCTAD) during its on-going 15th Quadrennial Meeting, hosted by Barbados.
“According to the FACTI panel (UN High Level Panel on International Financial Accountability, Transparency and Integrity) $7 trillion are parked in these tax havens and haven destinations,” he said.
“This plunder is taking place because of the corrupt ruling elite of the developing world,” the premier added.
He termed the challenge a “huge crisis”, which he predicted will “only get worse” in the coming years.
PM Imran Khan said the only way this will stop is if the recommendations made by the FACTI panel are implemented, while also acknowledging that “unfortunately the richer countries which can do something about it [have] no incentive to do anything”.
The premier said that the illicit outflows are “crushing” the people of the developing world, not just because the money is being siphoned off to the developed world — which could instead be spent on human development — but also because resultantly, when the money leaves the country, it affects the local currency which devalues, leading to inflation, and then more poverty.
He said an unseen effect which even the developed world will see in the days to come is economic migrants, which are barely a “trickle” right now.
“I urge you madam secretary general to do everything to raise awareness that this huge injustice which is being done to the people of the developing world, has to stop.”
Earlier, PM Imran Khan also spoke of prioritising vaccine equity, debt relief, and climate finance, as part of global economic recovery from the devastating effects of COVID-19 pandemic.
Expressing concerns over vaccine inequity, the prime minister called for a more equitable distribution. Also, recalling his campaign for debt relief, the prime minister advocated for debt relief until the end of the pandemic.
Furthermore, he reaffirmed the urgent need for mobilisation of and contribution by richer countries to climate finance in view of the vulnerability and existential challenges faced by Small Island Developing Countries (SIDS) and other developing countries, including Pakistan.
The Prime Minister was invited to the Leaders Dialogue along with Presidents of Kenya, and Guyana, Secretary General UNCTAD and heads of other UN agencies, under the theme of “Building a more prosperous development path: Matching the scale of the moment”.
The Quadrennial Conference, hosted virtually by Barbados from 4-7 October 2021, is taking place in the backdrop of unprecedented economic, public health and social effects, induced and exacerbated by COVID-19 pandemic.
FACTI panel recommendations
In February, the FACTI panel had released a report with 14 recommendations “to reform, redesign and revitalise the global architecture, so it can effectively foster financial integrity for sustainable development”.
1: ACCOUNTABILITY
1A: All countries should enact legislation providing for the widest possible range of legal tools to pursue cross-border financial crimes.
1B: The international community should develop and agree on common international standards for settlements in cross-border corruption cases.
1C: Businesses should hold accountable all executives, staff and board members who foster or tolerate illicit financial flows in the name of their businesses.
2: LEGITIMACY
International tax norms, particularly tax-transparency standards, should be established through an open and inclusive legal instrument with universal participation; to that end, the international community should initiate a process for a UN Tax Convention.
3: TRANSPARENCY
3A: International anti-money-laundering standards should require that all countries create a centralised registry for holding beneficial ownership information on all legal vehicles. The standards should encourage countries to make the information public.
3B: Improve tax transparency by having all private multinational entities publish accounting and financial information on a country-by-country basis.
3C: Building on existing voluntary efforts, all countries should strengthen public procurement and contracting transparency, including transparency of emergency measures taken to respond to COVID-19.
4: FAIRNESS
4A: Taxpayers, especially multinational corporations, should pay their fair share of taxes. The UN Tax Convention should provide for effective capital gains taxation. Taxation must be equitably applied on services delivered digitally. This requires taxing multinational corporations based on group global profit.
4B: Create fairer rules and stronger incentives to combat tax competition, tax avoidance and tax evasion, starting with an agreement on a global minimum corporate tax.
4C: Create an impartial and fair mechanism to resolve international tax disputes, under the UN Tax Convention. APP
