Chapter II.A Domestic public resources
1. Introduction On average, countries have increased their tax Domestic public finance is essential to providing revenue over the last 15 years (figure 2), although public goods and services, increasing equity and room remains for further improvement. In many helping manage macroeconomic stability. It is a countries domestic resource mobilization remains central component of financing across the sustain- insufficient to meet sustainable development needs. able development goals (SDGs), as well as the social The Addis Agenda recognizes that the foremost compact of the Addis Agenda (discussed in chap- driver of domestic resource mobilization is economic ter I on cross-cutting issues). This present chapter growth, supported by sound policies and an enabling focuses on raising resources and expenditures, as environment at all levels. It also notes the need to well as the quality and alignment of both with sus- strengthen tax administration, implement policies tainable development. Many commitments and to generate additional resources and combat corrup- actions in this chapter are national in nature, but tion in all its forms. At the same time it stresses the the Addis Agenda underscores that implementation importance of combatting illicit financial flows. In needs to be supported by international actions and a globalized world, there are limits as to what coun- cooperation. tries can do on their own through domestic policies,
Figure 2 Median tax revenue as a percent of GDP by income grouping, 1990–2013 (Tax/GDP ratio)
0.25 High income
Upper middle income 0.2 Lower middle income
Low income 0.15
0.1
0.05
0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: United Nations Department of Economic and Social Affairs calculations, based on International Monetary Fund World Revenue Longitudinal Data (WoRLD), 13 July 2015. Note: Tax revenue as a percent of GDP, country classification according to World Bank Group country income groups 2015. 34 Addis Ababa Action Agenda — Monitoring commitments and actions
and the Addis Agenda thus calls for strengthening funded by domestic taxes) can be a useful starting international tax cooperation. point for measuring government revenues and tax Commitments in the Addis Agenda aim to collection. However, generating consistent, com- address these challenges, underscored by the princi- parable revenue data and measuring revenue as ple of national ownership. This chapter also describes a percentage of gross domestic product (GDP) is how the Task Force will examine budget execution a complex undertaking. For example, there are and expenditure and follow-up on other topics, such changes in and uneven implementation of the sys- as extractive industries, national development banks tem of national accounts, discontinuities in time and subnational finance. series, differences between federal and non-federal 2. Domestic resource mobilization systems, differences between budgetary and other central government information, and different and taxation measures of GDP as reported by different institu- Governments recognized in Addis Ababa that the tions. These challenges create difficulties in aggre- mobilization of domestic public resources is central gation, as well as in measuring trends over time. In to the pursuit of sustainable development, including addition, the methodology used for aggregation will achieving the SDGs. often depend on the expected use of the data set. 2.1. Resource mobilization and domestic For example, the treatment of revenue from natural targets resource extraction varies across data sets, partially reflecting the different purposes for which they SDG 17 on the global partnership and means of were designed. implementation (MoI) target 17.1 (strengthen domes- As a result, while there are several different tic resource mobilization, including through inter- data sets available, they are not strictly comparable. national support to developing countries, to improve The International Monetary Fund’s (IMF) World domestic capacity for tax and other revenue collection) Revenue Longitudinal Data (WoRLD) data set is focus on domestic resource mobilization. However, designed to be as consistent as possible across coun- this target does not spell out in detail how this will tries and will be the basis of the Task Force’s work. be achieved. The Addis Agenda builds on this, rec- The database compiles comprehensive data on tax ognizing the need for significant additional domestic and non-tax revenues by country on an annual public resources. In particular, Governments: basis, going back to 1990. The WoRLD database combines data from two IMF publications: the IMF Remain committed to further strengthening Government Finance Statistics and World Economic the mobilization and effective use of domestic Outlook (WEO) and various Organization for Eco- resources (20, MoI 17.1) nomic Cooperation and Development (OECD) Rev- Welcome efforts by countries to set nationally enue Statistics publications. This annually updated defined domestic targets and timelines for data set can be helpful in tracking changes in taxes domestic revenues as part of their national across all major tax types and essentially all coun- sustainable development strategies (22) tries. Additional databases created by intergovern- Commit support to developing countries in need mental bodies such as the OECD, researchers, the in reaching these targets (22, MoI 17.1) private sector and multi-stakeholder partnerships Following-up on the Addis Agenda will can be used complementarily. 1 require more detailed reporting and monitoring In addition, countries maintain annual and, than is proposed for the SDG monitoring process. in some cases, medium-term forecasts for govern- Nonetheless, the indicators for MoI 17.1 (17.1.1 ment revenues as part of the overall fiscal framework, total government revenue (by source) as a percentage including expenditure, though there is no central of GDP; and, 17.1.2 proportion of domestic budget database on this. The IMF systematically tracks fore-
1 See for example http://www.ictd.ac/datasets/the-ictd-government-revenue-dataset; http://www.rockinst.org/gov- ernment_finance/revenue_data.aspx; https://dits.deloitte.com/. Domestic public resources 35
casts and medium-term forward looking scenarios base. Its criteria include administrative organization, on a country-by-country basis. taxpayer identification and registration, filing, rev- Tracking the action item on revenue targets enue controls and post-filing arrangements. These is also challenging. One way to track this would be are benchmarked within and across country groups, through voluntary country reporting in the context for example by income and features such as conflict of reporting on national sustainable development affected or resource dependent. It should be noted strategies, which take account of country circum- that specific country information derived from RA- stances, economic characteristics and initial condi- FIT is not public, though benchmarking across tions. This could be done through the annual Forum groups of countries can be made available. The tool on Financing for Development (FfD) Follow-up. has now been expanded into a more broadly used Case studies can also be helpful. The key issue will international survey on tax administration, as a joint be to measure progress toward appropriately set- endeavour between The Inter-American Center of ting individual goals over the medium and longer Tax Administrations (CIAT), the IMF, the Intra- term — with evaluations of why and how goals are European Organisation of Tax Administrations or are not being reached. Case studies can help assess (IOTA) and the OECD. It provides a core set of whether, over time, setting revenue targets actually questions and definitions that will form the basis of leads to increased revenue collection. Case studies the data collection system each organization will use can also assess drivers of domestic revenues and to gather data on tax administration. This will allow potential policy trade-offs by considering the over- more efficient data collection and will improve com- all economic context, including economic growth, parability of data between countries and organiza- external developments and government policies that tions, and establish metrics that tax administrations impact the tax base. globally could report against. The new survey will The commitment to support countries in need be launched by the four organizations at the Plenary in these efforts is discussed in section 5.4 on capac- of the OECD’s Forum on Tax Administration in ity building, and more broadly in chapter II.C on Beijing, China in May 2016. international cooperation. This data can be complemented with tax per- 2.2. Tax policy effectiveness, transparency formance assessment by multi-stakeholder assess- and administration ments of Public Expenditure and Financial Account- ability (PEFA) undertaken in selected countries. The Increasing domestic resource mobilization will Tax Administration Diagnostic Assessment Tool require changes to both tax policies and tax admin- (TADAT) is a new instrument used to diagnose istration. The Addis Agenda includes concrete com- weaknesses and assess performance in tax admin- mitments and action items in this respect. Specifi- istrations on a country-by-country basis. However, cally, Countries commit to: TADAT data is not public, nor is it intended as a benchmarking or comparative tool — its purpose is Enhance revenue administration through mod- rather to assist country authorities to develop and ernized, progressive tax systems, improved tax prioritize an evidence-based assessment of the areas policy and more efficient tax collection (22) for potential reform and improvement in their tax Work to improve the fairness, transparency, administrations. efficiency and effectiveness of our tax systems, The OECD, under the auspices of the Forum including by broadening the tax base and con- on Tax Administration, biennially provides compar- tinuing efforts to integrate the informal sector ative information and data on tax administration. into the formal economy in line with country The series summarizes tax administration systems, circumstances (22) practices and performance across 56 advanced and World-wide data on revenue administration emerging economies (including all OECD, Euro- performance is being tracked in a tool that was pean Union and Group of 20 members). IMF Fis- originally developed as the IMF’s Revenue Admin- cal Transparency Evaluations (FTEs) can provide istration Fiscal Information Tool (RA-FIT) data- additional insights in countries where these are 36 Addis Ababa Action Agenda — Monitoring commitments and actions
undertaken, as can findings from multi-stakeholder The indicator for the related MoI 3.a is3.a.1 initiatives including the Global Initiative for Fiscal age-standardized prevalence of current tobacco use Transparency (GIFT), the OECD Forum on Tax among persons aged 15 years and older. The Task Force and Crime, and the Extractive Industries Trans- could build on this indicator to include tax measures parency Initiative (EITI). The assessment of rev- and tobacco-related finance. Based on the World enue administrations can be further complemented Health Organization’s (WHO) technical manual on with case studies based on insights from activities taxation of tobacco, important metrics include tax by Addis Tax Initiative (ATI) members (including share as a percent of the retail price of tobacco and partner and donor countries, and regional tax organ- the revenue realized from tobacco taxation. Informa- izations, and international organizations) and other tion to track progress is available from the WHO, development partners. which conducts biannual global surveys of tobacco Additional data in addition to tax administra- prices and taxes. 2 The survey will specifically track tion parameters and revenue outturns will be needed countries that: increase excise taxes on tobacco; to follow-up on the portion of the commitment increase revenues from tobacco taxes; and earmark related to tax policy and progressivity of tax sys- tobacco taxes specifically for health purposes and/or tems. Measurement and monitoring of effectiveness, tobacco control. The survey methodology includes fairness and efficiency of tax policies in individual near universal coverage for tax information on the countries will need to be done using case studies. most sold brand of tobacco and less information on Likewise quantitative data on the widening of the averages and cheapest brands, but the WHO is mov- tax base and integration of the informal sector can ing to collect more data on the market average. The be treated in case studies, rather than cross-country WHO also publishes country profiles linked to ciga- analysis, which can be complemented by reference rette taxation and prices as well as information about to the data on informality from the World Bank exports, imports, production and illicit trade. It also Group’s enterprise survey data. has a simulation tool for countries to use to assess The IMF and the World Bank Group are tobacco taxation policies. Additionally, the WHO jointly developing a framework to be used to pro- monitors the countries that increase financial sup- vide diagnosis and assessment of individual coun- port for activities intended to achieve the objective try tax policy systems, against the background and of the WHO Framework Convention on Tobacco context of each country. This framework, when it is Control (see chapter II.C). Case studies can be pre- completed, could provide a publicly available system sented to show specific country efforts to reduce for assessment of these questions. However, it is not tobacco consumption and raise related revenues. intended that the framework will be — or should be — used for comparing or benchmarking coun- 3. Illicit financial flows tries against one another. The Addis Agenda also includes commitments on In addition to improving the effectiveness reducing illicit financial flows (IFFs), as a necessary of tax policy and tax administration, in the Addis measure to raise domestic resources. It identifies tax Agenda Governments specifically: evasion and corruption as particular areas that need both domestic and international action. Specifically, Recognize that price and tax measures on in the Addis Agenda, Governments: tobacco can be an effective and important means to reduce tobacco consumption and Commit to redouble efforts to substantially health-care costs, and represent a revenue reduce IFFs by 2030, with a view to eventually stream for financing for development in many eliminating them, including by combating tax countries (32, MoI 3a) evasion and corruption through strengthened
2 The OECD biennially publishes detailed information on rates, tax bases and calculation methods for excise duties and value-added tax on tobacco products in OECD countries. Domestic public resources 37
national regulation and increased international estimate IFFs. These tend to concentrate on selected cooperation (23, MoI 16.4) elements of IFFs, and thus do not give a global pic- Invite other regions to carry out exercises similar ture of the size or nature of illicit flows. For example, to the High Level Panel on Illicit Financial one methodology starts with errors and omissions in Flows from Africa (24) official trade statistics as a proxy for illicit flows. An Invite appropriate international institutions alternative measure starts from estimates on the pro- and regional organizations to publish estimates ceeds of crime. However, the data sources are gener- of the volume and composition of illicit finan- ally not robust in measuring changes or determining cial flows(24) trends across years. Commit to strive to eliminate safe havens that In one example of a methodology for measur- create incentives for transfer abroad of stolen ing IFFs, the World Bank Group’s “residual model” assets and IFFs (25) subtracts the total of funds actually used by a coun- try from the total entering that country and, if there The commitment on reducing IFFs is reflected are more funds coming in than funds being used, under SDG 16 in target 16.4. The SDG indicator the resulting fund shortfall is considered to represent (16.4.1 total value of inward and outward illicit finan- illicit flows. The underlying assumption is that funds cial flows (in current United States dollars)) could be that are not officially recorded are ‘illicit’. helpful in following-up on this. However, there is Another commonly used methodology meas- no agreed definition of IFFs or agreed-on methodol- ures trade mispricing or misinvoicing as a proxy ogy for their measurement. There is general agree- for illicit flows. This methodology views practices ment that IFFs include cross-border movement of of over- or under-invoicing of trade receipts as a financial assets relating to tax evasion, international means of transferring funds from one (typically trade fraud (including misinvoicing), criminal activ- high-tax) jurisdiction to another (typically low-tax) ity (including smuggling and trafficking in drugs, jurisdiction. Researchers aggregate the differences cultural objects, medicines, persons and natural in reported bilateral trade from the exporting and resources), and corruption. There is disagreement, importing sides, accessing data from the IMF’s however, on whether tax avoidance should be con- Direction of Trade Yearbook or the United Nations sidered an illicit flow. For example, the report of the Comtrade Database to get down to very specific High Level Panel on Illicit Financial Flows from product lines in the estimates. While trade mispric- Africa includes “tax abuse” which comprises “evad- ing could arise from multiple motivations — includ- ing or aggressively avoiding tax” 3 in its broad inter- ing money laundering — it can also represent capi- pretation of illicit flows. Other sources and institu- tal flight (in countries with exchange controls), tax tions exclude tax avoidance from the definition of evasion or tariff evasion. Similarly, while balance of IFFs on the grounds that legal exploitation of tax payments data should in principle cover all trans- loopholes in not illicit. actions between residents and non-residents, errors Currently no single tool or process can effec- and omissions may be caused by a number of factors, tively establish a comprehensive measure of IFFs at including suspect source data quality. the global or country level. Indeed, measuring and Global studies using the above methodolo- tracking illicit flows is extremely challenging, since gies are regularly produced by civil society organi- by their very nature illicit flows are not transparently zations, such as Global Financial Integrity, which or systematically recorded. Nonetheless, there are a combine the World Bank Group’s residual method few methods that are currently used to attempt to and the trade mispricing model, and by academ-
3 The panel’s report “defined IFFs as ‘money illegally earned, transferred or used’”, but went on to state “We also felt that the term “illicit” is a fair description of activities that, while not strictly illegal in all cases, go against established rules and norms, including avoiding legal obligations to pay tax.” Within the commercial component of IFFs the report identifies abusive transfer pricing, trade mispricing, misinvoicing, unequal contracts and tax inversion. See: http://www.uneca.org/sites/default/files/PublicationFiles/iff_main_report_26feb_en.pdf. 38 Addis Ababa Action Agenda — Monitoring commitments and actions ics. 4 The United Nations Economic Commission for parked in favourable jurisdictions due to low taxes, Africa produced an estimate for Africa, which was secrecy or other reasons. Methods for estimation published in the aforementioned High Level Panel look at discrepancies in the balance of payments report, which could be regularly updated and whose statistics, for example on portfolio equity hold- methodology could be adopted in other regions. ings, or at disclosures of offshore wealth holding in Some of these estimates can overstate the impact the aggregate by some jurisdictions. Such studies of ‘illicit flows’ on domestic resource mobilization, have been published by academics and civil society since they include the nominal value of the errors sources. Multinational enterprises (MNEs) based in and omissions, while the loss to public resource the United States are supposed to provide an esti- mobilization is often the tax or tariff amount that mate of potential tax liability of foreign earnings is evaded, which is a smaller number. At the same that are never repatriated with their Securities and time, these methods are generally not comprehen- Exchange Commission filings, leading journalists sive measures of illicit flows, as they yield little to and analysts to routinely report these figures. no information on other components of IFFs, such While transfer mispricing is not necessar- as the proceeds of corruption or criminal activities ily illegal, depending in particular on domestic such as illegal narcotics sales or smuggling of natural law, and is not always categorized as an illicit flow, resources. such conduct is widely regarded as being contrary Other approaches seek to estimate the pro- to prevailing rules and norms. Whether or not it ceeds of specific criminal activities. The United fits neatly into a definition of IFFs, it is considered Nations Office on Drugs and Crime (UNODC) important to measure its impact on countries, and estimates the value of the global illicit drugs trade particularly developing countries. Such measure- and other crimes (via surveys and questionnaires), ment is usually accomplished by analysing large but, due to the resource and data intensiveness of databases of MNE financial accounts to identify this effort, not for all crimes and not within time variances between expected taxes paid based on the periods which are robust enough to produce com- structure of MNE groups and tax rate differentials prehensive trend analysis. In relation to the volume and the actual taxes reported as paid in the finan- of IFFs related to corruption, various programmes cial accounts. Such analysis has been conducted by and initiatives have produced data on the experience the OECD and a number of independent academics, of corruption by the population. Surveys have been each with varying coverage and sometimes making supported by international organizations, including use of different databases. 5 As part of the OECD/ UNODC, the World Bank Group and the United G20 base erosion and profit shifting (BEPS) project, Nations Development Programme (UNDP). Civil the OECD presented a number of BEPS indica- society organizations also collect data such as Trans- tors, which will be refined and developed further parency International’s Global Corruption Barom- over time. Some research has also explored a related eter, but these usually focus on corruption percep- avenue for estimating BEPS using econometric esti- tions rather than the volume of resources. mations based on macro-differences in statutory An additional avenue of exploration is in look- corporate income tax rates and effective tax rates ing at off-shore un-taxed wealth. This can include of different countries. An alternative, explored by both personal wealth and corporate profits that are the United Nations Conference on Trade and Devel-
4 See for example: http://www.gfintegrity.org/report/illicit-financial-flows-from-developing-countries-2004-2013/; Ndikumana, J. et al, “Capital Flight from Africa”, in Capital Flight from Africa: Causes, Effects, and Policy Issues. Eds. Ajayi, S. Ibi, and Léonce Ndikumana: Oxford University Press, 2014. 5 For OECD see http://www.oecd-ilibrary.org/deliver/2315361e.pdf?itemId=/content/book/9789264241343- en&mimeType=application/pdf; for some academic work see Clausing, Kimberly A., The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond (11 January 2016). Available at SSRN: http://ssrn. com/abstract=2685442 or http://dx.doi.org/10.2139/ssrn.2685442; http://www.ictd.ac/ju-download/2-working- papers/91-measuring-misalignment-the-location-of-us-multinationals-economic-activity-versus-the-location-of- their-profits. Domestic public resources 39
opment, has used locational data on foreign direct Commits Governments to work to strengthen investment (FDI) flows to estimate profit shifting, regulatory frameworks to increase transpar- based on the empirical observation that FDI routed ency and accountability of financial institu- through offshore investment hubs (typically low-tax) tions, the corporate sector and public adminis- is associated with lower reported profitability of the trations (25) FDI in the destination country. Monitoring could also focus on measuring Activities and results of the Stolen Asset the commitment to and effectiveness of normative Recovery (StAR) initiative, jointly supported by the frameworks. Existing peer review frameworks, for World Bank Group and the UNODC, can also be example of the United Nations Convention Against monitored. In particular, findings can be based on Corruption, the Global Forum on Transparency the Asset Recovery Watch Database, which tracks and Exchange of Information for Tax Purposes, the all known asset recovery cases, and provides a “one Financial Action Task Force (FATF), and selected stop shop” to access the related public case infor- data collected at the international level, could be mation. This can be complemented by further data used for this. The follow-up process could look into from OECD surveys of OECD members about their whether this type of administrative data is useful to investigation and repatriation of illicit assets stolen monitor combatting IFFs and the related corruption in developing countries and hidden in OECD coun- prevention, anti-money laundering/countering the tries. 6 A progress report on efforts to develop a set financing of terrorism (AML/CFT) and asset recov- of good practices on asset return can be provided ery efforts. For example, efforts to eliminate safe annually. Information on programme activities havens for transfer abroad of stolen assets and IFFs and findings from the United Nations Convention can be monitored by looking at the number of coun- against Corruption (UNCAC) review mechanism tries implementing relevant global standards and in selected countries where reviews take place, can the effectiveness of their implementation. Relevant supplement the above information. The second cycle standards include those on AML/CFT, exchange of of the UNCAC review mechanism, which focuses information for tax purposes, and implementation in part on asset recovery, is a potential source of of global tax norms such as monitoring of beneficial information on the actions taken by member states ownership information, as discussed in section 5 of to enhance their legal, institutional and operational this chapter. The Task Force can monitor the impact capacities to recover stolen assets. Case studies can of these efforts. However, monitoring their effective- also be presented. ness in eliminating safe havens for transfer abroad of The OECD has published an assessment of stolen assets and IFFs is challenging, and case stud- how its members perform in policy areas essential ies could be used. to reducing their attractiveness to illicit funds from developing countries. This assessment puts together, 4. Return of stolen assets in a comparative manner, publicly available data pro- The Addis Agenda also has commitments on the duced through peer review processes conducted by return of stolen assets; it: the OECD and other bodies. The frequency of rep- lication of the exercise will depend on the publica- Encourages the international community to tion of new rounds of peer reviews covering OECD develop good practices on asset return (25) member states. Supports the Stolen Asset Recovery Initiative of Work to strengthen regulatory frameworks to the United Nations and the World Bank, and improve accountability will have to be reported on other international initiatives that support the in a qualitative manner. Future cycles of UNCAC recovery of stolen assets (25) review may include information in this regard. The
6 The survey was conducted twice:Few and Far: The Hard Facts on Stolen Assets Recovery and Tracking anti-corruption and stolen asset recovery commitments. 40 Addis Ababa Action Agenda — Monitoring commitments and actions
FATF assessments mentioned above will also provide cially those detailing inter-agency cooperation. The information related to this commitment. FATF itself also produces a myriad of case studies, reports of expert working groups, and trend and 5. International tax cooperation typologies analysis on money laundering and the The Addis Agenda recognizes that both strength- financing of terrorism. ened national regulation and increased international Evidence gathered by the World Bank Group cooperation are needed to tackle IFFs. It commits has indicated that banks might be cutting off to scale up international tax cooperation, which is money transfer operators’ access to banking ser- seen as a necessary complement to domestic efforts vices because the cost of complying with AML/ to raise resources. CFT and other requirements makes the business 5.1. Combatting money laundering/terrorist unprofitable. However, there is no plan for the financing World Bank Group to regularly monitor this issue. As a result of the evidence gathered in 2015, the Transparency is an important theme in the Addis Bank for International Settlements’ Committee on Agenda, including in relation to efforts on combat- Payments and Market Infrastructures has elabo- ting crime, which is also covered in chapter II.F. In rated proposals to encourage the use of know-your- the Addis Agenda, Governments: customer utilities which would facilitate informa- tion sharing. The Task Force can report qualitative Commit to strengthen international cooperation information on policy development in this area, and national institutions to combat money- as well as any quantitative information that may laundering and financing of terrorism(25) become available. Commit to identify, assess and act on money- laundering risks, including through effective 5.2. International efforts to combat tax implementation of the Financial Action Task avoidance and evasion Force standards on anti-money-laundering/ In the Addis Agenda, international cooperation to counter-terrorism financing (24) combat tax evasion and tax avoidance are important Encourage information-sharing among finan- subjects, forming a significant part of the negotia- cial institutions to mitigate the potential impact tions. The Addis Agenda specifically: of the anti-money-laundering and combating the financing of terrorism standard on reducing Commits to enhance disclosure practices and access to financial services(24) transparency in source and destination coun- tries, including through transparency in all Currently, the FATF and FATF-style financial transactions between Governments regional bodies monitor and publish information and companies to relevant tax authorities (23) on country performance relating to AML/CFT for Commits Member States to make sure that all their members. The IMF and other international companies, including multinationals, pay taxes organizations also conduct AML/CFT assessments, to the Governments of countries where eco- including for the IMF in the context of regular sur- nomic activity occurs and value is created (23) veillance and financial stability assessments (see Encourages countries to work together to chapter II.F). strengthen transparency and adopt policies, The February 2012 FATF (see section 3) including: MNE reporting country-by-country recommendations on AMF/CFT will likely have to tax authorities where they operate; access to beneficial implications for monitoring due to the beneficial ownership information for compe- emphasis they place on information, along with tent authorities; and progressively advancing risk and effectiveness. The FATF peer reviews towards automatic exchange of tax information and assessments can provide a follow-up mecha- among tax authorities as appropriate, with nism. Case studies and best practices publications, assistance to developing countries, especially such as those from the OECD’s multi-stakeholder LDCs, as needed (27) Forum on Tax and Crime, can be presented, espe- Domestic public resources 41
Stresses that efforts in international tax coopera- MNEs. Examination of where those MNEs are pay- tion should be universal and should fully take ing taxes, as revealed in country-by-country reports into account the different needs and capacities could contribute to analysis of whether MNE value of all countries (28) creation and economic activity is being taxed in the Welcomes on-going efforts, including the work jurisdiction where it is occurring. of the Global Forum on Transparency and There is no global tracking mechanism for Exchange of Information for Tax Purposes; country-by-country reporting. The OECD/G20 takes into account OECD work on BEPS (28) BEPS Action Plan includes a new standard of infor- Decides to further enhance the resources of the mation and proposed procedures for implementa- Committee of Experts on International Coop- tion. For implementation, countries would need to eration in Tax Matters to strengthen its effec- adopt national legislation, and there needs to be a tiveness and operational capacity (29); increase mechanism to exchange reports with other coun- the frequency of its meetings and its engagement tries. Some countries have already moved forward with the Economic and Social Council through legislation on country-by-country reporting. One the Special Meeting on International Coopera- mechanism for international exchange is the Mul- tion on Tax Matters (29); urges Member States tilateral Competent Authority Agreement on the to support the Committee and its subsidiary Exchange of Country-By-Country Reports, and bodies through the voluntary trust fund (29) the Task Force can follow-up on the signatories to this. The OECD’s “Inclusive Framework” for BEPS Overall assessments of the progress of interna- implementation (see below) is planning to monitor tional tax cooperation can be made through many progress on jurisdictions’ compliance with commit- mechanisms, which may include but are not limited ments they have made and effectiveness of the filing to the number of bilateral tax treaties, participation and dissemination mechanisms of the country-by- in and support for the forums and committees dis- country reports, and on other relevant actions. The cussed below, and ratification of multilateral instru- BEPS Action 11 final report on Measuring and ments. This includes forums with voluntary partici- Monitoring BEPS recommends the production of a pation, such as the follow-up mechanisms for the new publication named Corporate Tax Statistics that OECD/G20 agreements, as well as broader discus- will include aggregate and anonymous tabulations sions in the United Nations system. from country-by-country reports, as well as other The commitment to enhance disclosure prac- information to better analyse MNE tax behaviours. tices can also be monitored in a number of differ- In terms of beneficial ownership information, ent ways. For example the OECD’s Action Plan on the highest profile commitment has been from the BEPS included Action 12, which discussed manda- G20 group of countries, which adopted principles in tory disclosure regimes that require taxpayers to dis- 2014 but has not monitored their implementation. close their tax planning arrangements to the revenue Civil society organizations have produced studies on authority. The EITI requires public transparency on implementation of the new principles. Compliance payments to governments from all extractive indus- with Global Forum standards on beneficial own- try companies operating in EITI-adhering countries. ership will be assessed in its second round of peer IMF Fiscal Transparency Evaluations (FTEs) can reviews (discussed below). also provide insights. Qualitative information can The G20 and OECD have launched a new be presented from peer reviews under UNCAC as framework for BEPS implementation, which invites discussed above. interested countries and jurisdictions to work on As discussed above, estimates of tax avoidance reviewing and monitoring the implementation of and evasion are difficult to make, so that case stud- the already agreed OECD/G20 BEPS Action Plan, ies may be used to follow-up on the commitment as well as on developing standards on BEPS Project- to ensure that MNEs pay tax where activity occurs. related issues. Non-OECD countries and jurisdic- Additional tentative indications could come from tions can join this implementation framework with looking at effective corporate tax burdens on major Associate Status, on an equal footing with OECD 42 Addis Ababa Action Agenda — Monitoring commitments and actions
members and G20 and other countries that are cur- of the standard. Peer reviews will be undertaken on rently Associates to the BEPS Project. All countries the basis of agreed terms of reference, which now involved would be required to commit to the imple- include the updated requirements relating to benefi- mentation of the entire BEPS Action Plan. In gen- cial ownership information of all legal entities and eral, as the BEPS Project sets out 15 actions, many arrangements. An additional instrument to facilitate of which cannot be tackled without amending bilat- international administrative cooperation between eral tax treaties, implementing these changes on a countries in the assessment and collection of taxes treaty-by-treaty basis would be a very lengthy pro- is the Convention on Mutual Administrative Assis- cess. About 95 countries, representing more than tance in Tax Matters. 2,000 treaties currently in force, are now working However, it is important to note that countries together on the development of a multilateral instru- do not have equal levels of capacity to produce the ment capable of incorporating the tax treaty-related vast amount of information needed for peer reviews, BEPS measures into the existing network of bilateral as well as to implement the many provisions in the treaties. The Task Force will report on the number OECD/G20 BEPS Action Plan, such as country-by- of countries involved and implementation of the country reporting. Most standards have data and framework. record keeping provisions, and many countries are In 2014, the Global Forum on Transparency limited in their ability to produce such data, mak- and Exchange of Information for Tax Purposes ing it difficult for them to participate in the Global endorsed the new standard on automatic exchange Forum. In addition, some countries have chosen not of financial account information (AEOI), the Com- to implement the OECD/G20 BEPS Action Plan. mon Reporting Standard, which 96 jurisdictions There is currently no mechanism for reporting for have publicly committed to implement. these countries. The Global Forum conducts and publishes The Addis Agenda emphasizes the importance peer reviews to monitor compliance of its 132 mem- of inclusive cooperation and dialogue among national bers and other relevant jurisdictions to its agreed tax authorities on international tax matters. In this standard of transparency and exchange of informa- respect, it looks to the United Nations Committee of tion. The Global Forum’s annual report provides Experts on International Cooperation in Tax Matters detailed qualitative analysis of its membership and (the Committee) as an important forum because of the progress made in implementing the internation- its inclusive nature. The commitment to strengthen ally agreed tax standard on exchange of informa- the Committee’s effectiveness and capacity will be tion on request (EOIR), and in time, the new AEOI followed-up on in a number of ways. The Commit- standard. The peer review process is one of the main tee produces a report after each of its sessions that instruments used by the Global Forum to ensure provides information on its work, which is publicly that its members and relevant non-members effec- available on the Committee’s website. The United tively implement the internationally agreed stand- Nations Economic and Social Council (ECOSOC) ards. The outcomes of the peer reviews on EOIR also holds an annual discussion on the Commit- identify gaps in the legislative frameworks or prac- tee’s work and adopts a resolution and decision in tices against ten essential elements of the standard this regard. These documents track the work of the and provide ratings of each of the essential elements Committee, and provide further information about and an overall compliance rating. All peer review its composition and effectiveness. The information reports adopted by the Global Forum are published is mostly qualitative in nature, but with quantitative and are available at the Global Forum EOI Portal. aspects such as the number of publications. These The results of the peer review for each jurisdiction documents will also provide details about the new reviewed so far are also available in the summary working arrangements of the Committee, including of compliance ratings. From mid-2016, a second the transition to having two sessions a year for four cycle of reviews will commence, which will be a days each. More detailed information on progress combined examination of both the legal and regu- can be had through subcommittee reports, which latory framework and the practical implementation are presented at the Committee sessions. Details on Domestic public resources 43
the representation of Committee members can also may be of assistance if it is expanded (it is not com- be presented. prehensive, currently covering some 500 treaties The Addis Agenda urged Member States to that low- and lower-middle income countries in support the Committee and its subsidiary bodies sub-Saharan Africa and Asia have signed since 1970) through the voluntary trust fund, to enable the and regularly updated. In addition, there are private Committee to fulfil its mandate; including support- sector databases of bilateral tax treaties. The Task ing the increased participation of developing country Force can also report on the preparation of toolkits experts at subcommittee meetings, where the inter- and other materials that have been prepared to assist sessional work of the Committee is achieved. An low-income countries on negotiations and considera- additional area for follow-up is thus the volume of tions for entering into tax treaties. resources contributed to the Committee’s trust fund. The Addis Agenda recognizes that tax incen- This financing is critical to strengthen the Commit- tives can be an appropriate tool, including to attract tee and to meet the expectations of an expanded set FDI, but that regional and international cooperation of activities including enhanced liaising with other has the potential to reduce or minimize harmful tax international organizations and contribution to their competition (e.g., though “races to the bottom” in work, greater governmental and public interest in the dispensing tax incentives and exemptions). The IMF, Committee’s work, and more active subcommittees. OECD, World Bank Group and United Nations pro- 5.3. Tax treaties and voluntary agreements duced, at the request of the G20, a paper and tools on the effective and efficient use of tax incentives In relation to bilateral treaties and agreements, in the for investment in lower income countries, in 2015. Addis Agenda, Governments: Qualitative information on the progress in tax coop- Commit to reduce opportunities for tax avoid- eration in various regional groups can be observed ance, and consider inserting anti-abuse clauses and reported over time. Action 5 of the BEPS Action in all tax treaties (23) plan also addresses harmful tax practices. The BEPS Note that countries can engage in voluntary peer review process will address such practices, discussions on tax incentives in regional and including patent boxes, which include harmful international forums to end harmful tax features, as well as a commitment to transparency practices (27) through the mandatory spontaneous exchange of relevant information on taxpayer-specific rulings. Model provisions to prevent treaty abuse, The United Nations’ regional economic commissions including through treaty shopping, have been devel- can report on activities they have pursued in this oped and are being discussed, including in the con- regard, and other efforts within the United Nations text of the multilateral instrument for implementing system, such as at ECOSOC, will be presented. the BEPS Action Plan mentioned above. These would impede the use of conduit companies in countries 5.4. Capacity building with favourable tax treaties to channel investments The Addis Agenda references the need for assistance to and obtain reduced rates of taxation. Some of these developing countries in regard to domestic resource provisions require additional technical work, which mobilization. In it Governments specifically: will be finalized in 2016. This could be reported on through the BEPS Action Plan implementation Commit to strengthen international cooperation framework mentioned above. Some countries have to support efforts to build capacity in developing already proceeded to review individual bilateral tax countries, including through enhanced ODA treaties and incorporate anti-abuse clauses, for which (22, MoI 17.1) qualitative information can be presented. Though Commit international support to developing there is no official database of tax treaties that quan- countries in need in reaching targets for enhanc- tifies the presence or absence of certain provisions, ing domestic revenue (22, MoI 17.1) case studies can be presented. Academics and civil Support strengthening of regional networks of society have developed a tax treaty database which tax administrators (28) 44 Addis Ababa Action Agenda — Monitoring commitments and actions
International organizations and bilateral nical cooperation in the area of taxation/domestic donors provide support for domestic resource mobi- revenue mobilization by 2020. OECD ODA sta- lization. The OECD provides data on official devel- tistics underpin the annual monitoring of progress opment assistance (ODA, see chapter II.C), but do against reaching the ATI commitment of doubling not yet specifically track aid to tax administrations ODA to tax system development. Monitoring the or domestic revenue mobilization. The OECD evolution of signatories of the ATI could be an addi- Development Assistance Committee has proposed tional indicator of progress. a Creditor Reporting System (CRS) code dedicated Additionally, the IMF, OECD, United to tracking ODA related to domestic resource mobi- Nations and World Bank Group have been man- lization in addition to the broader category of public dated by the G20 to develop practical tools for devel- financial management. This is expected to be for- oping countries to deal with the BEPS Action Plan malised in 2016, allowing tracking of such ODA and other cross-border tax issues not covered by the from 2015 onwards. Some donors have attempted BEPS Project. to report on ODA spending in this category retroac- The Tax Inspectors Without Borders (TIWB) tively on their own initiative. Additional monitoring initiative, a joint project of the UNDP and OECD, and reporting can draw on multi-stakeholder plat- enables the transfer of tax audit knowledge and forms (in particular the ATI, see below). Some data skills to tax administrations in developing countries is already available by provider and recipient group- through a real time, “learning by doing” approach. ing, on the financial cost of the support, and effort Progress can be monitored through annual could be made to link this assistance to impact in updates on finalized TIWB projects and their rev- terms of improved resource mobilization. Depend- enue impacts. ing on data availability, reporting on support can The IMF provides technical assistance to be broken down by type (e.g., advice, training and approximately 100 countries every year. As in the capacity building). Broader support for domestic case of TADAT assessments, the outcomes of such resource mobilization by countries which are not advice are not public and are provided on a confiden- part of the ATI or the OECD Development Assis- tial basis to member countries. However, the princi- tance Committee can be examined with case studies. ples for provision of successful capacity building in Regional tax organizations such as the African the revenue area are found in many published IMF Tax Administration Forum, the Meeting Centre of papers. The existence of such technical assistance Tax Administrators and CIAT, can also be queried is not confidential, and thus could contribute to a to assess the support they receive from development measure of efforts to increase capacity building. The partners, the role they play in supporting member IMF will undertake additional efforts beginning in countries, and the impact of collaboration between 2016 to incorporate revenue mobilization advice in such organizations. Finally, the IMF receives a good its regular surveillance of member countries, includ- deal of external financial support for its technical tax ing on international taxation issues. assistance from individual member countries (bilat- The Global Forum engages in a range of activi- eral donors), and especially through its topical trust ties to support its member jurisdictions in effectively funds which pool donor support to revenue capacity implementing the international standards on trans- building. Similarly, the independent TADAT initia- parency and exchange of information. Work has tive is supported through a multi-donor trust fund. been completed to build a one-stop-shop for Global The financial support provided to those funds can be Forum technical assistance. The Global Forum regularly tracked and reported. Secretariat is working with its developing country Through the Addis Tax Initiative international members and five pilot projects to implement the assistance providers support partner countries to AEOI standard have been launched with developing implement the Addis Agenda in raising domestic countries (Albania, Colombia, Ghana, Morocco and public revenue. Signatories commit to step up their the Philippines). More projects are in the pipeline efforts to mobilize domestic resources and donors and qualitative and quantitative information about collectively commit to double their support for tech- project implementation can be reported. Domestic public resources 45
6. Expenditure tional Energy Agency work on fossil fuel support produces regular estimates of subsidies and other While much of the Addis Agenda on domestic public forms of support for fossil fuels for a large number resources focuses on revenue, it equally emphasizes of countries. that Member States are committed to the effective use of domestic resources. The social compact cov- 6.2. National control mechanisms, ered in the cross-cutting issues chapter is a high pro- transparency, non-discrimination and file commitment in the Addis Agenda that relates to procurement expenditure, and the gender section of the cross-cut- ting chapter covers important commitments related In the Addis Agenda, Governments: to non-discrimination, gender budgeting, and the role of women in the economy and decision making. Commit to strengthen national control mecha- There are other important commitments related to nisms, such as supreme audit institutions, along domestic public resource expenditure covered in the with other independent oversight institutions, cross-cutting chapter as well. as appropriate (30) 6.1. Fossil fuel subsidies Commit to establish transparent public procure- ment frameworks as a strategic tool to reinforce The Addis Agenda: sustainable development (30) Commit to increase transparency and equal Reaffirms the commitment to rationalize inef- participation in the budgeting process (30) ficient fossil-fuel subsidies that encourage waste- ful consumption by removing market distortions, Related commitments in this chapter on in accordance with national circumstances, promoting and enforcing non-discriminatory laws, including by restructuring taxation and phasing gender-responsive budgeting, and enabling women’s out those harmful subsidies, where they exist, to full and equal participation in the economy are fol- reflect their environmental impacts, taking fully lowed up in chapter I on cross-cutting issues, and into account the specific needs and conditions of its subsections 8 (promoting peaceful and inclusive developing countries and minimizing the pos- societies) and 9 (gender equality). sible adverse impacts on their development in a Some information on oversight agencies, manner that protects the poor and the affected including supreme audit agencies, is captured in communities (31, MoI 12.c) assessments made using the PEFA framework, par- There is a relevant indicator for the SDGs ticularly indicators 30 and 31. PEFA assessments are related to MoI 12.c (12.c.1 amount of fossil-fuel made for many developing countries with funding subsidies per unit of GDP (production and consump- from a donor trust fund housed by the World Bank tion) and as a proportion of total national expenditure Group, but are not made for developed countries. on fossil fuels). Monitoring fossil fuel subsidies that The International Organisation of Supreme Audit reflect the environmental impacts of fossil fuel con- Institutions and the World Bank Group are devel- sumption, requires estimates of existing levels of fuel oping a new benchmarking exercise of supreme audit taxes and also estimates of efficient fuel taxes (fuel agencies, which should facilitate better cross-country taxes needed to cover environmental costs). The comparisons. IMF’s Energy Subsidy Database, covering fossil fuel In a similar way, basic information on the products in over 150 countries, provides estimates workings of public procurement systems is captured for both efficient taxes and existing taxes and can in the revised PEFA exercise at indicator 24. Under be readily used for measuring fossil fuel subsidies the auspices of the joint World Bank Group and per unit of GDP. The OECD’s Taxing Energy Use OECD Development Assistance Committee Pro- report and methodology provides an analysis of the curement Round Table initiative, bilateral and mul- structure and level of energy taxes in the OECD tilateral donors worked together with some develop- and other selected countries. The OECD-Interna- ing countries to develop procurement standards for 46 Addis Ababa Action Agenda — Monitoring commitments and actions
ODA recipients known as the OECD Methodology 7. Additional topics for Assessing Procurement Systems (MAPS). The OECD is leading a set of partners to improve the The Addis Agenda also identifies other issues that are assessment process with the creation of MAPS II, relevant to domestic public resources which do not which should be universally applicable and will be fall under the categories presented above. launched in 2017. 7.1. Extractives and resources sector A civil society organization, the International Budget Partnership, conducts an Open Budget The Addis Agenda notes that countries relying sig- Survey which measures budget transparency across nificantly on natural resource exports face particular 100 countries; other sources include IMF Fiscal challenges. The Addis Agenda, specifically: Transparency Evaluations. Through the Global Ini- tiative on Fiscal Transparency (GIFT), the World Encourages investment in value addition, pro- Bank Group, IMF, OECD, PEFA and others are cessing and productive diversification(26) collaborating to further strengthen the promotion Commits to addressing excessive tax incentives and monitoring of transparency and participation related to these investments, particularly in in budget processes through the High-Level Prin- extractive industries (26) ciples of Fiscal Transparency and a forthcoming set Encourages countries to implement measures to of principles on public participation in budget mak- ensure transparency, and takes note of volun- ing. The GIFT principles do not yet have assessment tary initiatives such as the Extractive Industries frameworks or data collection associated with them. Transparency Initiative (26) However, none of the existing tools seek to measure Commits Governments to share best prac- and track the ability of procurement to serve as a tices and promote peer learning and capacity strategic tool, instead focusing on transparency and building (26) competitive bidding, which tend to relate to shorter- term goals of reducing corruption. Medium-term Case studies can be undertaken to assess coun- goals of fostering industrial upgrading, protecting try efforts to reduce excessive tax incentives in the the environment, or boosting social development extractives sector, including whether countries are in relation to procurement have no monitoring preparing tax expenditure statements detailing the framework. estimated costs of the incentives. The case studies In addition to the International Budget Part- could be informed by the findings of technical assis- nership, there also a number of multi-stakeholder tance providers, such as the IMF and World Bank partnerships, such as the Open Contracting Part- Group, in providing support to developing countries nership and Government Spending Watch, which on these issues. focus on transparency, data standards and data col- Insight on transparency, for those countries lection related to budgeting and public expenditure. that are participating members, can be obtained Currently the IMF tracks the outturn of government with findings from both the EITI and IMF FTEs, expenditure in the Government Finance Statistics including pillar IV of the Fiscal Transparency Code database, but this does not contain information for resource-rich countries. EITI member countries on budgets. Some of the partnerships have sought are assessed for compliance with the EITI standard, to match budget and expenditure data including and an annual progress report presents more detail with more up-to-date data, which can be useful to on how transparent EITI members are. the Task Force, but this is limited in geographical International organization and bilateral donor coverage at present. PEFA indicator PI-9 measures support to resource-rich countries around contract access to key fiscal information, and would allow the negotiation and implementation involves sharing Task Force to track the percentage of government of good practices to build capacity and building revenues, procurement and natural resource conces- infrastructure for peer learning. Additional support sions that are publicly available and easily accessible is also made available on the interaction between in open data format. extractives industries and taxation. Information on Domestic public resources 47
these initiatives will have to be qualitative. Some of Follow-up will also draw on efforts by the the funding for these activities can be monitored IDFC. The association includes 23 financial institu- and reported, with data on the provider, recipient tions from all regions and is developing methodolo- country, and financial cost of the support. This can gies for more comparable tracking of information be broken down by type of support (e.g., advice, across their membership. Amongst other activities, training and capacity building), and could include they conduct an annual green finance mapping exer- participation in regional and global events to share cise which seeks to quantify the amount of finance country experiences. Number and breakdown of from their members that is directed at climate change users of online resources can also be tracked. mitigation and adaptation, green energy and other environmental objectives. The IDFC green finance 7.2. National development banks mapping report presents aggregate figures for each sector and type of finance. It only disaggregates by The Addis Agenda notes the role that well-function- institution in terms of those based in OECD coun- ing national and regional development banks can tries and in non-OECD countries, so that regional play in financing sustainable development, with a or national analysis is difficult. countercyclical role, especially during crises. Specifi- In addition, in 2013, a group of 25 national, cally, the Addis Agenda: regional and multilateral development banks agreed to a set of harmonised indicators for measuring the Calls on national and regional development development results of private sector operations. banks to expand their contributions in relevant These predominately developed-country-based insti- areas important for sustainable development, tutions will now report development impact figures, and urge relevant international public and such as number of jobs created or the gigawatt-hours private actors to support such banks in develop- of energy produced, using the same framework. Such ing countries (33) results are currently not brought together in any sin- To track the contribution of development gle location and cannot be aggregated because of the banks to the agenda, the Task Force will follow risk of double-counting. Nonetheless, the data pro- trends in national development bank (NDB) invest- vides a basis for additional reporting. ment, building on existing public information from 7.3. Subnational urban development/ institutions and working with the International planning, subnational financing Development Finance Club (IDFC), an association of NDBs and regional development banks (RDBs). The Addis Agenda acknowledges that in some coun- As many NDBs raise funds in capital markets, their tries expenditures and investments in sustainable financial documentation often includes key met- development are being devolved to the subnational rics such as capital base, annual commitments and level, and that these institutions may lack the capac- annual disbursements. While some banks publish ity to effectively implement the Addis Agenda and, sectoral breakdowns of their operations, each insti- by extension, the 2030 Agenda. As a result, the tution has different categorization and classification Addis Agenda: systems. Nonetheless, available sectoral data is rele- vant for following-up on how NDBs are contributing Encourages the participation of local commu- at the national level in their specific contexts. Given nities in decisions affecting their communi- the idiosyncratic nature of each NDB and its relation ties, such as in improving drinking water and to national sustainable development strategies, case sanitation management (34, MoI 6.b) studies and lessons learned from NDB operations Commits Governments to support cities and can examine how NDBs operate counter-cyclically, local authorities of developing countries, par- and how in certain markets they effectively respond ticularly in LDCs and SIDS, in implementing to market failure, investment gaps and inadequate resilient and environmentally sound infra- private credit. structure and sustainable and resilient build- 48 Addis Ababa Action Agenda — Monitoring commitments and actions
ings using local materials (34, MoI 6.a, MoI that implement urban and regional development plans, 9.a, MoI 11.c) integrating population projections and resource needs, Commits to increase the number of cities and by size of city; and 11.c.1 proportion of financial sup- human settlements adopting and implementing port to the least developed countries that is allocated to integrated policies and plans towards inclusion, the construction and retrofitting of sustainable, resil- resource efficiency, mitigation and adaptation ient and resource-efficient buildings utilizing local to climate change, and resilience to disasters by materials. 2020 (34, MoI 11.b) Measuring international support for subna- Commits Members to develop and imple- tional development and finance is complex since ment holistic disaster risk management at data on ODA provided to the OECD does not pro- all levels in line with the Sendai Framework vide locational tags for all its projects. While sectoral (34, MoI 11.b) data is available, it does not include the level of speci- Commits States to support national and local ficity that would be necessary to track these indica- capacity for prevention, adaptation and tors, particularly around whether the recipient is a mitigation of external shocks and risk man- subnational entity. Additionally categorization may agement (34) not be consistent. For example, it is not clear whether Commits States to scaling up international investment in a rural hospital would be classified as cooperation to strengthen capacities of munici- a local or a health investment. palities and other local authorities (34) Project level data related to ODA contained Commits to strive to support local governments in the OECD CRS allows for multiple sector and in their efforts, as appropriate, to mobilize activity codes per project. However, it does not allow revenues, strengthen debt management, and for more detailed data on how much aid is spent for strengthen municipal bond markets (34) capacity building at local levels or capacity building Commits to promote lending from financial geared towards strengthening subnational finance. institutions and development banks, along with Growth in municipal bond markets can also be risk mitigation mechanisms, such as the MIGA, tracked. In addition, South-South cooperation while managing currency risk (34) could be important in this area (see chapter II.C). Commits to enhance inclusive and sustain- Although data in this area is limited for developing able urbanization and strengthen economic, country markets, Bloomberg often tracks new issues, social and environmental links between urban, and the International Finance Corporation or aid peri-urban and rural areas by strengthening agencies working on these deals (such as the United national and regional development planning, States Agency for International Development) can within the context of national sustainable devel- also supply information. opment strategies (34, MoI 11a) Qualitative information can supplement quan- titative data. Case studies and examples of successful These commitments are partly covered in MoI instances of donor collaboration to strengthen sub- targets under SDG 6 on water and sanitation, SDG national finance and lessons learned would be useful 9 on infrastructure, and SDG 11 on sustainable cit- and desirable. In that context, the United Nations ies and settlements. The related indicators include: Department of Economic and Social Affairs is col- 6.a.1 amount of water- and sanitation-related official laborating closely with the United Nations Capital development assistance that is part of a government Development Fund on a series of regional expert coordinated spending plan; 6.b.1 percentage of local consultations, with the objective to improve and administrative units with established and operational strengthen international cooperation on municipal policies and procedures for participation of local com- finance in support of the SDGs. In addition, the Task munities in water and sanitation management; 9.a.1 Force can call on case studies and examples draw- total official international support (official develop- ing, among others, from the Multilateral Investment ment assistance plus other official flows) to infrastruc- Guarantee Agency and national, regional and multi- ture; 11.a.1 proportion of population living in cities lateral development banks. Domestic public resources 49
In terms of the financial health of subnational In terms of the non-financial policy commit- entities, there is insufficient data available at the ments contained in the Addis Agenda, such as on global level that would allow for a comprehensive resilience, risk management and urban planning, assessment. Efforts are underway to fill some of many of these commitments relate to agreements these data gaps. For example, the United Nations made in Sendai as part of the Sendai Framework Human Settlement Programme is currently working for Disaster Risk Reduction. An open-ended inter- with the Lincoln Institute of Land Policy to design governmental expert working group on indicators a Global Municipal Database. The project is facing and terminology relating to disaster risk reduction some major challenges, however, including the lack established by the United Nations General Assem- of access to or availability of city level data in general, bly (A/RES/69/284) is developing a set of indicators standardization problems, limited information on to measure global progress in the implementation revenue sources and other data irregularities. While of the Sendai Framework. The indicators under the there is a lack of global data on financial health at SDG include: 11.b.1 proportion of local governments the subnational level, case studies could focus on cer- that adopt and implement local disaster risk reduction tain aspects of the financial health of subnational strategies in line with the Sendai Framework for Dis- authorities, such as: characteristics of grant finance aster Risk Reduction 2015-2030 and 11.b.2 number from the central government to subnational entities, of countries with national and local disaster risk reduc- implementation of e-government at the subnational tion strategies. While no global mechanisms yet exist level, effectiveness of public financial management to track the sustainability of urban infrastructure, or at the subnational level (for example capital plans, the pervasiveness of urban planning that incorpo- tracking of land value, local asset inventories, sub- rates sustainable development dimensions, case stud- national entity financial statements), and the finan- ies could highlight best practices in these regards cial sustainability of subnational entity finance (for from certain national or subnational contexts. example cash flow, fiscal space or other indicators).