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Why international taxation systems should be more inclusive

Now that taxation systems reach across borders, the role of politics is increasing. Professor Irma Mosquera Valderrama calls for a global, inclusive system. ‘I can offer suggestions, but the countries are the ones that have to do it.’

Countries had their own taxation rules until 2008. This changed with the financial crisis when it became clear that countries needed to cooperate more. With big scandals breaking and multinationals such as Google and Starbucks accused of tax dodging, the Organisation for Economic Co-operation and Development (OECD) and the G20 political forum introduced international rules to make it harder for multinationals to avoid paying taxes.

If they want to stand firmer against multinationals, countries need to work together on taxation. ‘But it’s really difficult to reach a consensus between so many countries’, says Professor of Tax Governance Mosquera Valderrama. ‘The agenda is often set by rich, developed countries, which makes it difficult for developing countries to implement these rules.’

Irma Mosquera Valderrama

Informal economy and other needs

Mosquera Valderrama therefore calls for greater inclusion in the debate on an international taxation system. ‘In Africa, for instance, a very large part of the economy is informal. Many people sell their wares on the street and this is often not registered’, she explains. ‘Developing countries have very different economic priorities from developed countries.’ And the implementation of rules, for instance by the OECD, is often too fast for developing countries. Mosquera Valderrama gives a lot of training to these countries and encourages them to ensure their voices are heard. ‘Developed countries often think they know exactly what developing countries need but developing countries need to decide this themselves. I see it as my job to provide information to developing countries so that they can decide what they need.’

‘Developed countries often think they know what developing countries need, but developing countries need to decide this themselves.’

Increasingly political

Mosquera Valderrama can see how the discussion about the taxation system is becoming increasingly political. Countries like Colombia, Nigeria, and other African countries have objected to the rules developed by the OECD and G20 because developed and developing countries are not treated equally.

All these different interests and priorities make it incredibly complex to come up with an international taxation system. Mosquera Valderrama thinks she will be dealing with this for the rest of her career.

Women’s voices

As well as aiming for an inclusive international taxation system, Mosquera Valderrama has another important goal: to have women’s voices heard, particularly women from developing countries. As the first Latin American professor at Leiden Law School, she feels it is her calling to open doors for other women. ‘Women are often underestimated, particularly women from developing countries. I believe that everyone can achieve their potential and I want to encourage everyone, women from developing countries in particular, to achieve this.’

Inclusion is an important theme in her life, both personally and professionally. She will continue to aim for an inclusive taxation system and will pass this on to her students. ‘I hope I can teach my students to be open-minded, to realise that it is important to look further than Europe alone and to listen to the needs of developing countries.’

Irma Mosquera Valderrama will give her inaugural lecture entitled Global Tax Governance: From Legitimacy to Inclusiveness on 30 June.

Text: Nynke Smits  

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