Why “Global” Fails:
Inclusive Institutions & International Tax Policy Making

In recent years we got to witness an increasing “globalisation” of tax policy, with leading policy institutions arguing that intensified internationalisation of tax policy issues is key to prosperity and stability of the global community. At the same time, we see more and more lower-income jurisdictions refusing to cooperate or adapt “global” tax policies, and implementing unilateral solutions instead. Many of them have claimed that international tax policy fora fail to properly include them in decision-making processes and represent their financial interests.
Globalization and digitalization of the past decades led to increased interconnectedness of sovereign nations, however, jurisdictions are still very different in terms of size and structure of their economies among other factors. Therefore, their tax policy choices also differ significantly. Recent research showed that the existing global tax policy institutions are systematically biased towards protecting financial interests of large, industrialized, capital-exporting countries, while they fail to properly represent “developing” countries interests. However, the demand for fair international tax policies, as well as for recognition of historical injustices related to international taxation, is clearly present, and truly inclusive institutions are key to achieving these goals.
The institutional architecture of global tax policy making has become very complex, with many national, regional and international actors pursuing various goals. While several platforms have an ambition to lead the international tax debate, the leading position of the OECD remains strong, and a shift of tax policy making to another platform in the nearest future seems unlikely from political perspective. Recently, the OECD experienced an important – yet very rapid – organizational change when the Inclusive Framework was created. The organisational structure, processes and practices will need time to adjust and to deliver desirable outcomes, while at the moment lower-income jurisdictions are still experiencing multiple issues when voicing their opinions and trying to affect content of tax policies drafted by the OECD.
The paper explores the influence that limited access of “developing” states and territories to international tax policy making had on the system of international taxation and inequalities between the Global North and the Global South. In addition, it discusses how institutional architecture of tax policy making can be altered to address the issue and distribute taxing rights in accordance with value creation rather than economic power. Argumentation is based on analysis of relevant OECD organisational documentation, publicly available macroeconomic data, in-depth interviews with tax policy professionals and experience of other institutions.
However, the OECD is not the first international forum experiencing inclusivity issues but aiming at representing its participants on an equal footing. Many international organizations faced similar challenges, and while it is difficult to judge how “perfect” their models of inclusion are, their experience is not to be wasted. I also explore experience of other international organizations by investigating what did they do to improve representation and inclusion of lower-income jurisdictions, and what lessons can be learnt from their experience. In particular, I attempt answering the following three research questions:
Q 1: What did other international organizations do to improve their inclusivity / representation of “developing” countries?
Q 2: Are there some parts of their experience that can be borrowed by the OECD to better represent interests of lower-income jurisdictions and produce more balanced policies?
Q 3: What amendments / additions to these practices might be needed given the international tax context?
This part of analysis examines experience of international institutions such as the World Bank, the International Monetary Fund, the Basel Committee on Banking Supervision as well as the Financial Action Task Force.