Cracking down on tax abuse will help promote economic and social rights


Advocates for economic, social and cultural rights should focus on tax abuse. A contribution to the openGlobalRights debate on Economic and Social RightsEspañolFrançaisالعربية

Audrey Gaughran
18 February 2015

Vast sums of money are diverted from the public purse to private pockets as a result of tax evasion and corruption every year, but government efforts to close tax loopholes are often met with explicit or implicit threats by companies to move elsewhere, taking their investment and jobs with them.

This is an international problem, and needs an international solution. But current efforts at co-operation are limited and fail to get anywhere near the heart of the problem. Countries need to join forces in a multilateral effort to go after the bad guys, as well as making the structural and policy changes necessary to address these issues globally.

Developing the right skills and partnerships to launch and complete effective investigations is part of the solution. Recently, advocates for economic, social and cultural rights (ESC) have acknowledged the close connections between states’ human rights obligations and tax revenues, including systems that enable corporations and individuals to transfer their wealth offshore, beyond the reach of governments.

Although no international human rights treaties explicitly mention tax, all treaties with resource implications are based on the assumption that governments will marshal resources to meet their human rights obligations. This includes funds for training police officers, maintaining courts, guaranteeing free and fair elections, ensuring a functioning system of primary education, or access to health care for all.

The International Covenant on Economic and Social Rights (ICESCR) is the rights treaty with the most explicit mention of resources, requiring states to use the “maximum available resources” to realize ESC rights. The Committee on Economic, Social and Cultural Rights –independent monitors established to track progress on ESC issues – notes that when states plead a dearth of resources, they must first “demonstrate that every effort has been made to use all resources that are at its disposition in an effort to satisfy, as a matter of priority, those minimum obligations.”


Demotix/Sumaya Hisham (All rights reserved)

Hundreds of protesters march through the streets of Cape Town demanding better housing and improved service delivery.

While states use a range of sources to fund public expenditure, typically most states’ revenues come from taxes. Tax receipts are therefore a critical factor in their ability to maintain sufficient social spending to discharge treaty obligations.

Some human rights experts are studying the ways states use their resources, tracking their budgets and expenditures to discover whether they are truly seeking to fulfill their human rights treaty obligations. The International Budget Partnership, for example, has been working with civil society groups around the world to analyze and influence public budgets in order to reduce poverty.

It is only very recently, however, through the work of the UN Special Rapporteur on Extreme Poverty and the Centre on Economic and Social Rights that human rights activists have begun examining state resource mobilization.

When examining “available resources,” we must look not at what is de facto available today, but what could – legitimately – be available, were governments to make the appropriate efforts. When examining “available resources,” we must look not at what is de facto available today, but what could – legitimately – be available, were governments to make the appropriate efforts. Debates about tax evasion and avoidance, austerity, post-2015 development financing and growing wealth inequality have begun to expose where the world’s wealth is located, and who controls it. The revelations have been shocking: not only do a small number of people and corporations control massive wealth, but the systems by which they maintain and grow their wealth are often outside individual state control.

In Europe, for example, where economic crisis and the need for austerity measures are familiar issues, politicians have proposed regressive tax measures that would potentially undermine resource mobilization for human rights. In other cases, there have been disturbing revelations about tax avoidance by multinational corporations. What this means is that money that could be used by governments to fund social spending, reduce poverty and realize human rights is being diverted into private hands through channels that are legal, although widely seen as unjust. The same systems – tax havens and offshore bank accounts - also facilitate the movement of illicit wealth.

A 2014 report by Global Financial Integrity found that the developing world lost US$6.6 trillion in illicit financial flows between 2003 and 2012, with these outflows increasing at an alarming average rate of 9.4% per year. The outflows – facilitated by, among other things, tax haven secrecy, anonymous companies, and money laundering techniques – were far greater than the total official development assistance provided to developing countries over the same period, which was $809 billion.

To date, Amnesty International has focused primarily on state failures to respect and protect ESC rights, and on discrimination in access to key goods or services, such as education. Until now, we have not focused our energies on studying how states access and use resources to meet needs and obligations for all.

Budget analysis is an important tool in this work, though such analyses are limited to what a state says - or believes - is currently available. Any analysis of how Portugal or Sierra Leone, for example, are allocating their budget would not reveal tax evasion or the movement of wealth offshore by multinationals or high net worth individuals.

Without examining these deeper issues, advocates are at risk of making simplistic recommendations that accept the resource status quo, along with significant global injustices. Ironically, many of the states providing aid to developing countries that cannot meet their ESC obligations are also home to companies taking wealth from those same poorer countries at a rate, and amount that far outstrips aid flows. They are also, in some cases, architects of the very structures – tax havens and offshore finance hubs – that enable them to do so.

If the human rights and development communities want to move beyond hand-wringing, they must get involved in in-depth, rigorous investigative work to expose, case-by-case, the invidious systems and policies that facilitate the outflow of wealth, and to connect these systems to human rights impacts.

Economic and social rights activists must focus on international solutions to tax evasion. Pointing fingers at violators and increasing international development aid budgets is not enough. And we should not leave the tax justice movement and economists to advance the agenda on ethical access to global wealth alone.

Human rights activists must also develop the skills and partnerships to be part of these tax evasion investigations and solutions.


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