Topic One: Combatting Offshore Tax Evasion and Tax Havens
Since the financial crisis in 2008, there has been a growing awareness of international tax crimes. Estimates state that each year trillions of dollars in government revenue are lost as a result of offshore tax avoidance and evasion.
Tax evasion occurs when an individual or company attempts to avoid legal tax obligations through illegal and fraudulent means. This can include failing to report the full amount of their income, false expense claims, and failure to pay the proper amount of tax due. Tax avoidance, however, involves the attempt to reduce the amount of taxes owed through legal means, through taking advantage of ambiguities and weaknesses in existing tax law. Despite these definitions, oftentimes the line separating the two is unclear. Due to differing criminal laws across countries, it can be difficult to determine when a company or individual can be charged with criminal fraud.
Tax havens are countries that have relatively low taxation rates. Popular examples of tax havens include Bermuda, the Netherlands, Luxembourg, and Singapore. These countries all have business-friendly laws that allow international businesses to establish themselves in the nation and pay less in taxes. By allowing this, tax haven countries are often seen as enabling companies to avoid paying taxes in countries where they are rightfully due.
The United Nations has frequently been called upon to address and combat tax evasion, avoidance; tax havens, and financial secrecy. For years, experts have stated that tax evasion poses global economic risks and stands in the way of achieving the 2030 Sustainable Development Goals. Many have called for the creation of a new UN Tax Body to fight illegal financial flows.
Things to consider:
- How do you determine what is tax evasion and what is tax avoidance?
- What role should the UN play in creating and regulating tax law?
Topic Two: Tariff and Trade Regulation
Free trade has been the foundation of international cooperation and a fundamental aspect of globalization for decades. The World Trade Organization (WTO) has established a system of rules dedicated to open, fair, and undistorted economic competition with the ultimate goal of a free international trade system.
Lowering trade barriers – specifically tariffs and quotas – is a founding principle of the WTO. Since the creation of the General Agreement on Tariffs and Trade (the predecessor of the WTO), there have been eight “rounds” of negotiations, with a ninth currently being negotiated. From these negotiations, the WTO has worked to gradually reduce trade barriers and open up world markets through incremental changes, something the WTO refers to as “progressive liberalization.”
However, if free trade is beneficial, why would some countries impose tariffs or restrict imports through quotas?
Both tariffs and quotas attempt to protect national industries from competition with foreign markets. The WTO defines tariffs as customs duties on merchandise imports; essentially, tariffs are taxes on goods brought into a country. Tariffs give locally produced goods a price advantage over similar goods that are imported from another country and provide a significant source of revenue for governments. A quota, on the other hand, is a restriction on the quantity of a good or commodity that can be imported within a specific period. Quotas prevent “excessive” amounts of foreign goods from entering a country’s economy.
Dozens of countries have signed and implemented free trade agreements. Examples include the European Free Trade Association (EFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the North American Free Trade Agreement (NAFTA), which is currently in renegotiation. Many of these countries involved in these agreements still subsidize and protect their national industries through tariffs and quotas.
Things to consider:
- How is free trade beneficial? How is it a detriment?
- Are developed and developing countries impacted differently by free trade?
- How can the UN better regulate bilateral and multilateral trade agreements? Should the UN be more involved in these negotiations?