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Human rights impacts of taxation, Human Rights Council set to examine

The human rights impacts of fiscal and tax policy will be the subject of an upcoming report by the Special Rapporteur on Human Rights and Extreme Poverty. The report, to be presented in June of next year (at the 26th session of the United Nations Human Rights Council) comes on the throes of growing scrutiny of economic policies by human rights advocates and will likely be welcome not just by them, but also by organizations that work on tax justice and revenue transparency issues and will draw reassurance from seeing their concern become a human rights issue.

The report offers a chance to develop further some of the contents of the Guiding Principles on Human Rights and Extreme Poverty, adopted last year by the Human Rights Council. Principle 53 calls on States to make certain that adequate resources are raised and used to ensure the realization of the human rights of persons living in poverty. “Fiscal policies, including in relation to revenue collection, budget allocation and expenditure, must comply with human rights standards and principles, in particular equality and non-discrimination,” it reads.

Indeed, fiscal and tax policies are essential areas of the human rights struggle that have received surprisingly limited attention from a human rights perspective. Recent evidence of the importance of bringing human rights accountability to tax and spending is provided by the measures several governments have taken or are on their way to take to cut spending, with consequent threat of retrogression on the enjoyment of economic and social rights including jobs, housing, health and education. Impacts of these measures on the right to water were recently the focus of a recent report by the respective Special Rapporteur. Not only are these cuts based on false economic assumptions about the behavior of the economy. A recent paper by Initiative for Policy Dialogue shows that they are going sometimes farther than anyone could plausibly consider called for, by aiming at lower than pre-crisis spending levels (measured as a percentage of GDP).

As early analysts of structural adjustment in the developing world found out, the brunt of cuts in spending measures frequently falls on the most vulnerable, especially women. Because the claim governments often wield to justify spending cuts is that spending needs to be brought in line with available public revenue, there is a need to place the spotlight on who pays taxes and how much.

That is what many development and social justice organizations began studying in the 1990s. They identified regressive patterns of taxation such as the resort to taxes on consumption and wages that hurt poorest households, while direct taxes that are going to be felt most by the wealthiest, or the lavishing of generous tax breaks on companies bringing dubious benefits ashore, mysteriously disappeared from the political debate.

At the same time, the increase in transnational activity and freer capital mobility, encouraged by western donors and international financial institutions as a path to growth, were revealed as a key point of vulnerability for tax collection systems. Firms operating across borders could, often without even running afoul of any laws, minimize their tax costs, with correlative losses for both developing and developed country tax administrations.

As maneuvers involving tax havens and shell companies to hide revenue were better understood, the need for intergovernmental cooperation on tax issues to backstop successful mobilization of domestic resources became evident. So have become the extraterritorial human rights obligations for which countries failing to properly cooperate may be answerable.

The upcoming report will consider issues such as tax revenue and distribution, taxation of corporations and the financial sector, intergovernmental tax cooperation, tax evasion and illicit financial flows, and distribution of public expenditure.

The Special Rapporteur’s initiative will also provide a platform for civil society organizations in different countries to voice concerns about the tax practices of their governments. A questionnaire has been submitted by the Rapporteur to all governments. Questions included are whether the tax regime allows the State to raise adequate resources to ensure the realization of economic, social and cultural rights, and whether  there are obstacles, at the national or international level, that impede the State’s ability to do so.

As is practice in the human rights monitoring bodies, civil society organizations can offer shadow reports on these questions. But, in addition, another questionnaire is addressed to civil society organizations and national human rights institutions.

Both questionnaires, as well as more information on the Special Rapporteur’s upcoming report, are available here.


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October 2018
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