How are taxes driving the UN Sustainable Development Goals?

UNITED NATIONS – Tax revenues remain the most sustainable source of income for governments and play a crucial role in financing the United Nations Sustainable Development Goals (SDGs). It reduces the need for international aid and contributes to the repayment of heavy debts, ultimately strengthening a country’s ability to withstand external shocks.

In 2022, the UN Development Program (UNDP), in partnership with the Finnish and Norwegian governments, launched the Tax for SDGs Initiative with the aim of helping countries improve domestic resource mobilization and track their progress towards achieving the goals to speed up.

Under the initiative, taxation is considered both a revenue collection tool and a policy tool to encourage sustainable growth strategies and influence behavior towards desired climate, nature, wellbeing and governance outcomes.

In 2023, Tax for SDGs made significant progress and signed 22 Country Engagement Plans (CEPs). Through the CEPs, the Tax for SDGs supports governments in tackling tax avoidance, tax evasion and other illicit financial flows, in particular through technical assistance and facilitating cooperation.

It also supports them in aligning their tax and budgetary policies with the SDGs and integrates developing country perspectives into regional and international discussions on taxation.

In addition, Tax for SDGs has launched the concept SDG Taxation Framework (STF) (Diagnostics), a tool designed to help national governments effectively assess and align their tax systems with the SDGs.

The STF (Diagnostics) design was tested in nine countries – Armenia, Bhutan, Djibouti, Nigeria, Sri Lanka, Tanzania, Togo, Uzbekistan and Zimbabwe – for selected SDGs based on their priorities. More than 1,500 staff from 74 government agencies have been trained and reported capacity improvements.

UNDP Administrator Achim Steiner said: “The success of the Tax for SDGs Initiative is a testament to the collaborative efforts between countries, international organizations, academia and civil society. Together we have shared best practices, knowledge and lessons learned, creating a community committed to driving real change.”

Tax for SDGs includes the joint Organization for Economic Co-operation and Development/UNDP Tax Inspectors Without Borders (TIWB) initiative, which is implementing 59 programs in Africa, Asia and the Pacific, the Arab States, Europe and Central Asia, and Latin -America and the Caribbean. .

It is a unique approach to capacity building that deploys experts to the tax authorities of developing countries to provide practical, hands-on assistance on ongoing audit matters and related international tax issues.

With support from international partners and countries including France, India and Italy, TIWB has secured $230 million in additional tax revenues collected by developing countries and $1.11 billion in additional tax revenues collected by 2023, for a total of $2.30 billion collected and $6.05 billion in total since its launch. in 2015.

Tax discussions

To facilitate the participation of developing countries in global tax discussions, Tax for SDGs organized several events. These included a session with the World Health Organization at the UN General Assembly last September and the second Dialogue on Taxes and SDGs in 2023, which brought together 400 policymakers from 61 countries, including 14 ministers, with tax officials, diplomats and opinion leaders from 48 organizations .

These discussions improved understanding of the links between taxation and the SDGs, promoted peer-to-peer exchanges, developed interdisciplinary tax approaches and explored innovative tax measures for sustainable development.

In addition, the initiative organized missions, workshops and a national dialogue with parliamentarians, youth, researchers and taxpayers to help tax authorities build capacity and implement SDG-aligned policies.

In his opening speech at the side event of the Ecosoc Financing for Development Forum 2024 on Tax for SDGs, Marcos Neto highlighted the work of the initiative: “By building on the success of the Tax for SDGs Initiative, we aim to provide countries with the tools and expertise necessary to align their tax and budgetary policies with the sustainable development goals.”

“The success of the Tax for SDGs Initiative is a testament to the joint efforts of countries, international organizations, academia and civil society,” said Steiner.

Significant progress has been made with Tax for SDGs in all regions. In Africa, it launched Country Engagement Plans and Tax Inspectors Without Borders programs, focusing on digitalization and policy integration, such as tax and gender initiatives.

In Europe and the Commonwealth of Independent States, Tax for SDGs has facilitated the implementation of important legal reforms in Armenia and Uzbekistan. Arab states, with the support of the initiative, have improved digital tax administration and climate-related tax policies, especially in Lebanon and Egypt.

Tax for SDGs also launched programs in Peru and Saint Lucia and contributed to digitalization reforms in Honduras. In Asia and the Pacific, fiscal policy was strengthened and taxpayer confidence was built through strategic partnerships.

This impactful work highlights governments’ keen interest in working with UNDP to create policies that finance sustainable growth and promote implementation of the SDGs.

UNDP remains committed to working with partners and donors to advance initiatives such as Tax for SDGs. As Bjørg Sandkjær, State Secretary at the Norwegian Ministry of Foreign Affairs, said at the Finance for Development Forum: “We greatly appreciate the partnership with UNDP and other partners within the Tax for SDGs Initiative. I believe the report shows some impressive achievements, and hopefully this initiative will expand into other areas, with new partners joining us.”

UNDP Tax for SDGs will continue to work with governments to strengthen domestic mobilization of resources to finance the SDGs while increasing the capacity of tax administrations to tackle tax avoidance, tax evasion and other illicit financial flows.

UNDP VIA IPS

Thomas Beloe is Acting Director of the Sustainable Finance Hub at UNDP. Ahtesham Khan heads the Tax for SDGs Initiative.