The intersection of human rights and tax justice

A human rights approach provides an entry point to challenge regressive and unfair tax and fiscal policies, says Peter Gillespie.

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AT the 26th session of the UN Human Rights Council last June, the UN Special Rapporteur on extreme poverty and human rights tabled a report on the human rights impacts of fiscal and tax policies. The report, based on consultations with governments, business enterprises and civil society organisations, outlined a human rights approach to assessing fiscal and tax policies and noted that tax revenue shortfalls, debt and austerity measures undermine the obligations of states to achieve economic, social and cultural rights for their citizens.

The Human Rights Institute Task Force of the International Bar Association also published a report examining the intersection of tax abuses, poverty and human rights. The 'Tax Abuses, Poverty and Human Rights' report was based on consultations held in Brazil, Swaziland, South Africa, Zimbabwe and Jersey, as well as expert opinions from legal specialists. The report concluded that tax abuses have negative impacts on virtually all human rights principles and that the consequences are particularly severe for poor people in developing countries.

Both of these reports were presented at a symposium on human rights and tax justice held at McGill University in Montreal, Canada, last June. The symposium, attended by 100 researchers, academics and activists from Europe, Africa, and North and South America, aimed to encourage research on the relationship between human rights and taxation, and provide new tools to policy advocacy initiatives to put an end to tax abuses.

All of these activities reflect a growing international discussion on the human rights consequences of illicit financial flows, the illegal cross-border movement of finance due to crime, corruption and tax evasion. Since the largest proportion of these illicit outflows is due to tax abuses by corporate entities, this discussion holds major implications for corporate tax policies and accountability standards.

Since the adoption of the Universal Declaration of Human Rights in 1948, member states of the United Nations have ratified a variety of human rights covenants related to civil, political, social, cultural and economic rights. In addition, several human rights instruments provide protections to children, women and the disabled. UN bodies such as the Human Rights Council also are involved in developing principles, policies and standards that shape the interpretation and practice of human rights protection.

All of these conventions require member states to fulfil certain human rights obligations. The International Covenant on Economic, Social and Cultural Rights asserts that states have a duty to provide health services, to reduce infant mortality, to deliver universal and free primary education, and to ensure that citizens have adequate food, clothing and housing. The Convention on the Rights of the Child requires states to provide primary health care, primary education, access to adequate and nutritious food and clean drinking water, and to provide protection from exploitation and abuse. 

Fulfilling these obligations requires resources. The UN-supported High Level Panel on Illicit Financial Outflows from Africa reported that the continent loses $50 billion a year in illicit outflows. A 2009 study commissioned by Christian Aid estimated that the world's 49 poorest countries lose $160 billion a year in lost tax revenues due to trade mispricing by transnational companies. Clearly, it is not possible to meet basic human rights responsibilities given this massive haemorrhage of resources.

Despite the fact that human rights are universal, many states have interpreted their obligations as applicable only within their own borders. In order to address this gap, leading jurists from around the world came together in 2011 to assert that states also have extraterritorial obligations. The Maastricht Principles call on states to refrain from activities that impair the enjoyment of human rights outside of their own territories. Such extraterritorial activities relate to international agreements, to trade, finance and investment, as well as to business corporations operating internationally.

For social justice activists, a human rights approach provides an entry point to challenge regressive and unfair tax and fiscal policies. Human rights obligations are based on internationally agreed principles that most states have agreed upon. A human rights analysis helps shift the discourse on tax justice by bringing principles of equity and non-discrimination to the forefront. Moreover, a human rights framework strengthens demands for corporate and government accountability and transparency. 

The staggering levels of inequality between high-income and low-income countries have been created and maintained by the flow of resources from the South to North. While Northern countries proudly proclaim the virtuousness of their international aid programmes, they have deliberately created the conditions that have led to this reality. Achieving accountability, fairness and transparency in taxation is one of the most important policy issues of our time. This insane economics must end. Justice demands it.

Peter Gillespie is with the Halifax Initiative, a coalition of Canadian social justice organisations.

*Third World Resurgence No. 289, September 2014, p 39