Economic and Financial Committee

Letter from the Chairperson

Dear Delegates,
My name is Chirayu Sodani, and it is my esteemed privilege to serve as the chairperson of the Economic and Financial Committee.

I am a 12th grader pursuing commerce and mathematics. I take a lot of interest in reading books and articles about the Indian politics and economy. I love playing badminton and cricket. I have been participating in MUNs for 5 years and think they have the capability of bringing out patriotism for the country, which is reflected from the debates (not the Arnab Goswami type) and deliberations. My advice to the first timers is to not hesitate from speaking in the committee: if you don’t speak, it will surely give you under-confidence, and if you speak, it may even bag you an award due to your constructive and emerging confidence in the committee.

This year’s agenda of ‘Cross Border Tax Evasion’ will involve incorporation of economic and accountancy perspectives, which would be quite interesting. Cross border tax evasion is an issue faced by every country which makes its discussion necessary. I advise the delegates to come up with more constructive and technical solutions in the committee which have the ability of both bridging the loopholes of government policies and prevent further spread of tax evasion.

I look forward to seeing you in October.
All the best, and keep researching!
Chirayu Sodani
Chairperson
Economic and Financial Committee
ecofin@shishukunjmun.com

Organ Description

The Economic and Financial Committee (ECOFIN) is the second committee among the six standing committees of the General Assembly. It takes care of issues revolving around economic growth and development, such as macroeconomic policies (including international trade, international financial system, and external debt sustainability), funding for development, supervising the budgetary policy of the Member States, poverty alleviation, globalization and interdependence, operational activities, and information and communication technologies for development. Besides general macroeconomic policy issues, issues such as sustainable development and environmental sustainability have also been a focus of the committee. The ECOFIN committee is legislative and can, therefore, issue directions, proposals, and remarks to various parties such as member states, NGOs, and UNOs. However, it is vital to understand that the committee does not take any physical action by itself and its resolutions are non-binding. Despite that, it is not right to say that ECOFIN has no authority. Within the UN, ECOFIN has supreme authority over financial and economic work globally. Additionally, ECOFIN is accountable for the implementation of UN Plans of Action and the conclusions of world conferences relating to finance and development. ECOFIN relies heavily on coordination with UN technical agencies like IMF, World Bank, ILO, and WTO. The primary responsibility for this coordination is taken up by the 54-member Economic and Social Council (ECOSOC), which the committee also oversees.

Agenda: Cross Border Tax Evasion

Tax evasion refers to deliberate reduction of taxable income, for non-payment of taxes, by committing several manipulations, with the help of aggressive tax planning, done by tax advisors and tax strategists. Cross border tax evasion arises in course of an international transaction. It is majorly committed by multinational corporations or by individuals having high net worth. The sole aim of these entities is to decrease their taxable income and increase their profits.
There are several methods through which international tax evasion are possible, one being base erosion and profit shifting through transfer pricing: transfer pricing (a legal way of shifting profits) is manipulated by MNCs and experts to secure more profits. Entities also shift their profits and/or assets to countries which have either low or no tax rate, known as ‘tax havens’. This affects the revenue generation of countries from where the income or profit is generated. Excess income is often used for illegitimate purposes such as terror financing, drug trafficking, and Hawala.
The committee’s focus would be to tackle and prevent the situation of cross border tax evasion through a stringent legalization. It is very important for the delegates to analyze the situation, where entities are trying to use tax avoidance methods (otherwise legal) to commit tax evasion. A proper legislative framework must be drafted to provide a firm differentiation between tax evasion and tax avoidance. Further course of action under this agenda will mean tax evasion is no more an issue of alert for member states.