In the wake of the unprecedented COVID-19 crisis, tax systems should be reformed, and tax avoidance and evasion reduced, to ensure an economic recovery in which everyone pays their share, says the International Monetary Fund (IMF).
Taxes pay for many of the things that are fundamental to functioning societies across the world, such as schools, health care, and social services. Money raised through taxation is crucial to ensuring that these services are maintained during the COVID-19 crisis. But, when businesses shut down, and millions lose their jobs, as has happened during the current crisis, tax revenue plummets.
In the short-term, governments have put together stimulus packages, and a wide array of measures to help businesses and citizens get back on their feet. The IMF is tracking these efforts, which range from a $540 billion European Union package, which includes funding to help the hardest-hit states; to a ‘cash for work’ program in Cambodia; and, in Samoa, a six-month reduction in private utility bills.
At the same time, the IMF has made emergency COVID-19 funding available, particularly to those countries with developing economies. The IMF has made some $250 billion available, in the form of financial assistance and debt service relief, to some 77 member countries.
For example, In April, the IMF approved Afghanistan’s request for an emergency assistance package of approximately $220 million, to help the country cope with the disruption to trade, which has led to heavy damage to the economy.
Bangladesh, which has been badly hit by plummeting demand for one of its main exports, clothing, received emergency assistance worth some $732 million in May. Also in May, to avoid what the IMF characterized as “immediate and severe economic disruption” resulting from the pandemic, Egypt received a package of more than $2.7 billion, to help alleviate some of the most pressing financing needs, including for spending on health, social protection, and supporting the most impacted sectors and vulnerable groups.
But, in the longer-term, these stop-gap measures will not be enough to fix many of the underlying problems of the global economy, which include growing inequality within countries, and the ability of multinational enterprises to legally minimise corporate taxes.
The progressive approach
Victoria Perry, Deputy Director of the IMF’s Fiscal Affairs Department, and an expert on taxation, told UN News that, in planning the post-pandemic recovery, countries should look at dealing with inequality by implementing more progressive tax systems: “this means that the average tax rate rises, along with income. The extent of the tax burden for richer people is for each country to decide, but it is certainly problematic when effective tax rates for better off people are lower than for poorer ones. It is also often the case that better off people, with access to tax advice and more complex financial affairs, can make better use of exceptions or loopholes in the tax system than those who rely only on wages. Closing such options can make for a more equitable system and — depending on the country — can be more important than structural reforms of tax rates.”
Before the COVID-19 pandemic, the growing gap between rich and poor was already a cause for concern. Whilst inequality has fallen between countries, with some countries, such as China, making huge strides in raising overall income levels in recent decades, inequality within countries appears to be rising. For Ms. Perry and the IMF, personal income taxes play a leading role, when it comes to determining the progressivity of the tax system.
Ms. Perry adds that another option for some developing countries, which have trouble raising and enforcing a personal income tax, is to look at taxing property: “whilst income is relatively easy to hide, luxury homes are very visible, and a tax-free threshold means that owners of cheaper homes can be exempt or relieved from paying it”.
Income inequality differs widely across countries, but studies show that creating a fairer society, is not only about redistributing wealth, but, as Ms. Perry explains, putting in place policies that help people to gain sustainable, decent work: “Globalization has affected all open economies, but countries with effective redistributive tax and benefit systems have been able to avoid sharply rising inequality. However, redistribution on its own is not enough. It has to go hand-in-hand with a host of other measures, such as retraining, and job support”. In thinking about equity, then, it is important to look at both sides of the equation—not only taxes, but how the money is spent to improve lives.
Getting to the source of the issue
Some studies have calculated that, in richer countries, some 10 per cent of corporate tax revenue is lost to tax avoidance by multinationals. Developing countries are estimated to lose even more, in proportion to the national incomes.
“Another problem is that the international tax system may shift the tax base away from the ‘source’ country, says Ms. Perry. “So, if a mining company has its headquarters (residence) in a richer country, but operates mines in a less-developed economy (the source), the source country may not get the lion’s share of the tax revenue. When we talk about ‘fair and equitable distribution’, many observers are talking about ensuring that source countries get a better deal. The current international debate over taxing major digital tech companies, many of which are headquartered in the US, is similar, but the “digital” economy is even harder to address. Even though they’re doing business and making money all over the world, where the presence is virtual rather than physical, countries are not allowed to collect tax revenue on the income, under the current system”.
“We are going through this huge economic crisis, and countries are having to make major adjustments to their economies. But inequality is also a kind of huge global problem in itself. This is also then an opportunity to change tax systems for the better, to make them fairer and more equitable, and to promote economic activity that is less polluting, less dominated by industry with a large carbon footprint, and more sustainable.”
UN Women’s feminist roadmap tackles triple crises of jobs, care and climate
The UN’s gender equality and empowerment organization on Thursday published a flagship feminist plan for economic recovery and transformation, which aims to learn the lessons of the past, and seize the opportunity to handle COVID-related crises better.
UN Women’s Beyond COVID-19: A Feminist Plan for Sustainability and Social Justice, draws on the latest data, analysis, and input from more than 100 global experts to provide concrete pathways for putting gender equality, environmental sustainability, and social justice at the centre of global development efforts.
“We have a generational opportunity to break the vicious cycle of economic insecurity, environmental destruction and exclusionary politics and shape a better, more gender-equal and sustainable world”, said Pramila Patten, UN-Women’s Acting Executive Director.
A gloomy assessment
In the first UN plan of its kind, the report details how the COVID-19 pandemic has exacerbated pre-existing gender inequalities and laid bare weaknesses in the already fragile global care economy.
“Globally, in 2019 and 2020, women lost 54 million jobs, and even before the pandemic, they took on three times as much unpaid care work as men”, according to UN Women.
Moreover, women are disproportionately impacted by environmental degradation while also being left out of decision-making around policy and financing to address climate change.
And by the end of 2021, men’s jobs will have recovered, but there will still be 13 million fewer women in employment, the gender empowerment agency pointed out.
Trio of crises
The trio of interconnected crises of jobs, care and climate, systematically undermine gender equality and threaten the survival of people and planet, but there is still an opportunity to change course.
“Today’s report provides a roadmap for how to do this, while recovering the ground that’s been lost on gender equality and women’s rights”, said Ms. Patten.
To address these intersecting crises, UN Women is calling for better policy, action and investment, including in the care economy and social infrastructure, such as creating jobs and increasing support for unpaid caregivers.
The report maintains that public investments in care services could create 40 to 60 per cent more jobs than the same investments in construction.
Fair shot for women
Under the premise that transitioning to environmental sustainability can create up to 24 million new green jobs, the report stresses that women should have their fair share of these opportunities, including by getting the necessary training and skills.
And women’s leadership must be promoted across institutional spaces, from governments to civil society and the private sector, and especially in crisis response.
Despite having been on the frontlines of the COVID-19 response, making up 70 per cent of healthcare workers globally, the roadmap notes that women currently hold only 24 percent of seats on COVID-19 taskforces that have coordinated the policy response around the world.
Raise the financial bar
Moreover, despite their critical roles as watchdogs and providing a social safety net in communities, women’s organizations are woefully under-funded.
In 2018-19, women’s rights organizations received only one per cent of all aid allocated by the Organization for Economic Co-operation and Development (OECD) to gender equality, amounting to only a tiny fraction of total aid.
This must change, says UN Women.
To finance these measures, transformative macroeconomic policies – including progressive taxes and, especially for low-income countries, global cooperation and debt relief – are urgently needed, the report says.
Equally important will be to achieve a shift in power relations to amplify the voices of historically excluded groups and ensure effective gender mainstreaming.
Torture, killings, lawlessness, still blight Burundi’s rights record
The people of Burundi continue to endure serious human rights violations including possible crimes against humanity, the majority committed by those with links to the ruling party, UN-appointed independent investigators said on Thursday.
Despite a pledge by President Evariste Ndayishimiye to address the situation in the country after years of violent repression, crimes including arbitrary detention and execution, torture and intimidation, have not stopped, according to the UN Commission of Inquiry on Burundi.
“Not only have grave human rights violations continued to occur, but in some respects the situation has deteriorated”, since President Ndayishimiye’s took office in June last year, Commission chair Doudou Diene told journalists in Geneva.
These abuses happened against a backdrop of “multiple armed attacks” by opponents of the Government since August 2020, Mr. Diene explained.
“While seeking persons allegedly involved in the armed attacks or collaborating with rebel groups, the security forces targeted mainly members from the main opposition party, the National Congress for Liberty (CNL), former members of the Tutsi-dominated Burundian Armed Forces (ex-FAB), returnees and some of their family members. Some were executed, others disappeared or were tortured while detained arbitrarily.”
The Commission noted that although the level of political violence in the Great Lakes nation decreased immediately after the 2020 elections – and with the country appearing to be “on the road to normalization” – the human rights situation remains “dire”.
The national poll was held after the death of President Pierre Nkurunziza, whose decision to stand for a controversial third term in 2015 sparked major protests and mass displacement, and ultimately the establishment of the Commission of Inquiry by the Human Rights Council, in 2016.
The political climate today is “highly intolerant of dissent”, the Commissioners maintained in their fifth and final report to the Human Rights Council, highlighting how members of opposition parties – notably the CNL – have been targeted, in particular since June 2021.
Many security officers and others linked to the ruling party, the CNDD-FDD, continued to go unpunished for their crimes, they added, pointing to agents of the National Intelligence Service (SNR), police officers – including from the Mobile Rapid Intervention Groups (GMIR) – and the Imbonerakure youth-league, whose brutality has been documented in previous Commission of Inquiry reports.
Individuals belonging to these groups are “the main perpetrators of those violations, some of which could amount to crimes against humanity”, the Commission of Inquiry report said. “They continue to enjoy widespread impunity for their actions, as has been the case since 2015.”
Justice reforms lacking
Highlighting the lack of promised structural reforms to promote accountability in the country, Commissioner Françoise Hampson said that the “rule of law in Burundi continues to erode, despite the stated intention of President Ndayishimiye to restore it”.
In common with the Commission’s previous findings, Ms. Hampson noted how testimonies gathered for its latest report pointed to an organized campaign “against those elements of the civilian population that were seen as or thought to be hostile to the government in power” – a potential crime against humanity. “Some of the violations that this year’s report detail, seem to be a continuation of that policy,” she added.
In Burundi, the judicial system could not be relied upon “to curb or remedy human rights violations”, Ms. Hampson continued, warning that the newly elected Government “has only been strengthening its control over the judiciary”.
For the past five years, the Commission of Inquiry on Burundi has documented, monitored and reported alleged human rights violations in Burundi.
It has conducted more than 1,770 interviews, including remotely, in the Democratic Republic of the Congo (DRC), Rwanda, Tanzania, Uganda, as well as Burundi.
The Commission is scheduled to present its report to the Human Rights Council on 23 September, 2021.
COVID crises highlight strengths of democratic systems
The UN Secretary-General, on Wednesday, urged the world to “learn from the lessons of the past 18 months, to strengthen democratic resilience in the face of future crises.”
In his message for the International Day of Democracy, António Guterres explained in the wake of COVID-19, this meant identifying good governance practices that can counter all kinds of emergencies, whether public health, environmental or financial.
“It means addressing the egregious global injustices laid bare by the crisis, from pervasive gender inequalities and inadequate health systems to unequal access to vaccines, education, the internet and online services,” he said.
For the UN chief, along with the human toll carried by those most deprived, “these persistent historical inequalities are themselves threats to democracy.”
Participation of all
The Secretary-General argues that strengthening democracy also means embracing participation in decision-making, including peaceful protests, and giving a voice to people and communities that have traditionally been excluded.
“The silencing of women, religious and ethnic minorities, indigenous communities, people with disabilities, human rights defenders and journalists is an impediment to creating healthy societies,” Mr. Guterres said.
For him, “democracy simply cannot survive, let alone flourish, in the absence of civic space.”
In his message, António Guterres also stresses the importance of phasing out emergency powers and legal measures by governments, which in some cases have become repressive and contravene human rights law.
He explains that some States and security sector institutions rely on emergency powers because they offer shortcuts, but cautions that, with time, “such powers can seep into legal frameworks and become permanent, undermining the rule of law and consuming the fundamental freedoms and human rights that serve as a bedrock for democracy.”
At the height of the COVID-19 pandemic, the Secretary-General warned that “every crisis poses a threat to democracy, because the rights of the people, in particular those most vulnerable, are all too quickly ignored.”
It is for that reason that protection of rights in times of crisis is a key element of his Call to Action for Human Rights, issued in February of last year.
As the world starts to look beyond the pandemic, Mr. Guterres called on the international community to “commit to safeguarding the principles of equality, participation and solidarity”, so that it can better weather the storm of future crises.
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