* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
Tax systems are important financial tools for directing economic growth processes, redistributing wealth and encouraging (or discouraging) certain behaviours by re-pricing some goods and services (e.g. excises on cigarettes and alcohol). Widespread neoliberal austerity measures, illicit financial flows[i] and competitive tax rates to attract corporate investments, however, are drastically reducing the ability of national governments to design progressive tax systems that can mobilize resources for the public good.
Tax abuses, tax evasion and the weight of debt payments from developing to developed countries in particular reduce the amount of revenue available to national governments for development and fulfillment of human rights, including women’s rights. A recent study conducted by Eurodad, for example, found that developing countries are losing twice the amount of money they earn because of issues like tax evasion, profits taken out by foreign investors and interest repayments on debt.
Tax is gendered
Fiscal policies are not gender neutral. They often reflect the experience and prejudice of unequal societies and systems. In fact, tax systems hinge on certain concepts and assumptions that are themselves gendered (e.g. ‘breadwinner,’ ‘household’) and tend to put women at a disadvantage. For example, tax systems can reinforce stereotypes about women’s income being secondary to that of the male breadwinner, and also fail to recognize or help distribute unpaid care work.
The series of briefs that we at AWID produced in response to the financial crisis of 2008 show how poorly designed fiscal policies undermine progress towards gender equality – specifically demonstrating how women carried the burden of the crisis.
Drawing on perspectives from different regions around the world, we highlighted the catastrophic and inequitable impacts of austerity measures on the poorest and most vulnerable. Today, ongoing cuts in vital social protection sectors such as health care, education, unemployment insurance, pensions, and care systems continue to undermine the lives of people and signify a regression and neglect in the fulfillment of human rights. Women are the safety nets of last resort to sustain their families and social structure.
Even with increasing concerns that tax systems are biased against women, policy makers are yet to make the connection.
Current trends indicate a big shift away from taxing income to taxing consumption through value-added taxes (VAT). Given gendered consumption patterns – women take care of a larger proportion of household expenditure - the extent to which the VAT is applied to basic consumption goods such as food, affects women disproportionately.
Policy makers should carefully consider the set of goods and services that should be domestically zero-rated or exempted. Assessment of impacts of fiscal policy —with data disaggregated by sex and social group—is essential to ensuring these and other economic policies do no harm but rather have positive impacts across the board, including on women of diverse backgrounds.
Gender-responsive budgeting?
The United Nations encourages national governments to institute Gender-Responsive Budgeting (GRB) to have a direct positive impact on equal access to basic needs. According to the UN, GRB “entails identifying and reflecting needed interventions to address gender gaps in sector and local government policies, plans and budgets. GRB also aims to analyze the gender-differentiated impact of revenue-raising policies and the allocation of domestic resources and Official Development Assistance”.
GRB should be constructed and implemented in ways that respect, protect and fulfill human rights for all, and guarantee the democratic participation of stakeholders, including women’s rights movements. At the same time it is important to bear in mind that gender budgeting alone will not achieve gender equality and women’s rights.
Why? Because the allocation of finance to promote gender equality is simply not enough.
For GRB to be effective, there needs to be political will and government commitment to gender equality through the allocation of resources to their national policies, programs and laws, as well as to women’s rights organisations. Governments need to track how the money is spent and CSOs must demand accountability.
Can tax work for human rights?
For tax to work for human rights, the following strategies are needed:
- Governments should establish robust mechanisms for taxing the corporate sector and reforming the financial structure through progressive redistributive measures. For example, financial transaction taxes could, according to estimates, raise as much as $650 billion and at the same time regulate markets that tend to have destabilizing trading practices.
- Challenging the minimal regulation of the financial economy that allows big companies and rich individuals to pay minimal or no tax is essential to addressing social inequality and human rights. Taxing the rich 1%, though crucial to raise revenues, still only addresses the consequences of inequality, not the root causes that enabled such an outrageous concentration of wealth in hands of the few to occur in the first place.
- There needs to be a shift from indirect taxes[ii] to direct taxes as a more progressive and equitable system of taxation. Governments should refrain from attaching additional taxes to certain goods and services e.g in form of VAT.
- Greater international tax cooperation is needed, and could be achieved by upgrading the UN Tax Committee so that governments can coordinate national taxation regimes. This would ensure corporate tax rates deal with trade mispricing and other tactics used by multinational corporations to avoid paying taxes.
- Accountability and transparency are fundamental to evaluate whether pledged resources are actually disbursed and where they are going. There are some existing experiences with tracking funding allocations. For example, GENDERNET in collaboration with UN Women developed the Global Partnership indicator on gender equality that “provides data on whether governments track allocations for gender equality and make this information public. It is an entry point for ensuring that domestic resource allocations benefit women and men equally”.
- The Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) could be a very important tool to put fiscal policies to account for their impact on women. It could integrate mechanisms to track funding for women’s rights as part of reviewing the duty of member States to finance the realization of women’s right
Research by Ana Inés Abelenda and Susan Tolmay. Adapted from the following article: http://www.awid.org/news-and-analysis/tax-justice-and-human-rights#sthash.xUV8DtDp.dpuf
[i] For more information on illicit financial flows, see for example: http://www.gfintegrity.org/issue/illicit-financial-flows/
[ii] Indirect tax is a tax levied on goods and services as opposed to direct tax on income or profits.
