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.”
Russia responsible for Navalny poisoning, rights experts say
Russia is responsible for the poisoning and attempted killing of jailed opposition figure Alexei Navalny, two independent UN rights experts said on Monday, issuing an “open call” for an international investigation into the incident.
Special Rapporteurs Agnès Callamard and Irene Khan believe the politician was poisoned to send a “clear, sinister warning” to anyone wanting to criticize the Government.
Mr. Navalny fell violently ill on a domestic flight from Siberia to Moscow last August. He was later flown to Germany where toxicology reports determined he had been poisoned with Novichok, a Soviet-era nerve agent. On returning to Moscow last month, he was imprisoned for violating a sentence for alleged embezzlement.
“It is our conclusion that Russia is responsible for the attempted arbitrary killing of Mr. Navalny”, said Ms. Callamard, UN Special Rapporteur on extrajudicial, summary or arbitrary executions, speaking during a press conference in Geneva.
Part of a larger trend
The independent experts were appointed by the UN Human Rights Council and are not UN staff nor are they paid by the Orgnaization.
They conducted a four-month investigation into the Navalny case and wrote to the Russian authorities last December but never received a response. Their letter was made public on Monday, in line with Council provisions.
They said only Russia is known to have developed, stored and used Novichok. A novel version was used against Mr. Navalny, suggesting further development of the toxin. It was also “very unlikely” that non-State actors would have the capacity to develop or use the nerve agent, or that private buyers would have the expertise to properly handle it.
“It is also the findings of our work that the poisoning and attempted killing of Mr. Navalny, along with the lack of investigation and the denying narratives, are part of a larger trend, ongoing over several decades, of arbitrary killings and attempted killings, including through poisoning, by the Russian authorities of journalists, critics and dissidents and are therefore consistent with an overall pattern of modus operandi”, Ms. Callamard added.
Sowing fear in opponents
Mr. Navalny has long been a staunch critic of the Kremlin who repeatedly denounced corruption, said Ms. Khan, the UN Special Rapporteur on the promotion and protection of the right to freedom of opinion and expression.
He had suffered two previous chemical attacks prior to the Novichok poisoning, as well as physical attacks, threats, harassment, surveillance and criminal sanctions.
“The motive of the poisoning, preceded by a long history of attacks, harassment and trumped up charges, was both to violate the human rights of an individual but also to knock out a political opponent”, she said.
“And we believe that there might be a broader purpose to the poisoning. Novichok was chosen precisely to cause fear. And we believe that the poisoning of Mr. Navalny might have been carried out deliberately to send a clear, sinister warning that this would be the fate of anyone else who might criticize and oppose the Government.”
US report on Kashoggi killing ‘important’
The independent experts also welcomed a United States report on the October 2018 killing of Saudi journalist Jamal Kashoggi, which was issued on Friday.
The report found Crown Prince Mohammed bin Salman complicit in the murder of Mr. Kashoggi, a US permanent resident, at the Saudi consulate in Istanbul, Turkey.
The Biden administration said it will impose visa bans against some 76 Saudi individuals in response.
“The fact that the report named the quasi head of a State, Mohammed bin Salman, as being responsible for the operation that killed Mr. Jamal Kashoggi is an important demonstration as well on the part of the United States to be transparent”, said Ms. Callamard, who has long called for an investigation.
However, she was disappointed that the report contains “nothing new” factually, as it only provides an analysis of circumstantial evidence, and that the US authorities have not so far announced any action regarding liability and responsibility on the part of the Crown Prince.
“It is extremely, in my view, problematic if not dangerous to acknowledge someone’s capability and then to tell that someone ‘But we won’t do anything. Please proceed as if we had said nothing’”, she said, referring to President Joseph Biden’s campaign promise to protect press freedom.
Elaborating further, Ms. Khan reported that only 12 per cent of journalist killings are investigated and prosecuted.
“I am pleased that the report has been published but very disappointed, very disappointed indeed, that on the issue of accountability, the US has not seen fit to take stronger action at this stage,” she said.
Pandemic pushing people ‘even further behind’
As the COVID-19 pandemic gathers pace, people worldwide are “being left behind – or pushed even further behind”, the UN High Commissioner for Human Rights warned on Friday.
At the same time, civil society activists were being denied the right to voice opposition to government.
“This makes us all weaker”, she told the virtual meeting. “It heightens grievances that are destabilizing. It means we miss perspectives and expertise that could inform and strengthen our initiatives. It shields corruption and abuses, by silencing feedback.”
Engage the public
While acknowledging the major health and financial challenges facing governments in the pandemic, the rights chief underlined that “a country’s people are its leader’s finest and most important resource” and must be involved in policy making.
“Participation is a right – and it is also a means that ensures better, more effective policy,” she said. “To help heal harms, bridge deep fractures, and lead change that meets expectations, every society, and every leader, needs to engage the public’s participation, fully and meaningfully.”
The High Commissioner’s speech addressed human rights issues in some 50 countries.
Improve social protection
She welcomed the cessation of hostilities in the Nagorno-Karabakh conflict zone, announced in November by the leaders of Azerbaijan, Armenia and the Russian Federation, and called for investigations into all alleged violations that occurred during fighting there.
Moving to Asia and the Pacific, Ms. Bachelet encouraged governments to improve social protection systems as the pandemic has shown their value. On average, countries devote less than two per cent of GDP to social protection, compared with the global average of 11 per cent, she said.
The UN rights chief addressed the “serious concentration” in civic space across Southeast Asia, including what she described as “the alarming situation” in Myanmar, where the military seized power at the beginning of the month.
Turning to India, she said ongoing protests by thousands of farmers in India highlight the importance of having laws and policies based on consultations with concerned parties.
“Charges of sedition against journalists and activists for reporting or commenting on the protests, and attempts to curb freedom of expression on social media, are disturbing departures from essential human rights principles”, she added.
Tackle remaining issues
In the Americas, Ms. Bachelet welcomed “broad new measures” to tackle structural inequalities and racism in the United States, which include action to redress racially discriminatory federal housing policies.
“We also welcome new steps to end several migration policies that violated the human rights of migrants and refugees, including executive orders to end the family separation policy. I encourage further measures to tackle remaining issues, such as the massive detention of migrants, through the implementation of alternatives to detention”, she added.
A decade on from the “Arab Spring”, many countries in the Middle East and North Africa continue to suffer very serious inequalities, as repressive policies have been strengthened in some cases.
“Despite these setbacks, I remain optimistic that justice and human rights can be realized across the Middle East and North Africa – and that progress in this direction will ensure deep and lasting progress for development and peace,” Ms. Bachelet said.
Syria’s ‘grim anniversary’
Next month will mark 10 years since the start of the Syrian crisis, which the High Commissioner called a “grim anniversary”. She expressed hope that the Constitutional Committee will realize “tangible progress” and that the international community will work to bridge divides while also putting the needs of Syrians first.
Ms. Bachelet underscored that humanitarians and human rights workers must have immediate access to the Tigray region of Ethiopia, where government and regional forces have been clashing since November. She said credible investigations into allegations of violations such as mass killings, extrajudicial executions and other attacks on civilians are critical.
The human rights chief warned that the conflict in Tigray, coupled with rising insecurity in other parts of Ethiopia, could have serious impact on regional stability and human rights, underlining the need for a peaceful solution.
UN Security Council demands COVID-19 vaccine ceasefires
The UN Security Council on Friday unanimously passed a resolution calling on all Member States to support a “sustained humanitarian pause” to local conflicts, in order to allow for COVID-19 vaccinations. Briefing journalists afterwards, World Health Organization (WHO) chief Tedros Adhanom Ghebreyesus argued that more could be done.
While welcoming the historic resolution and upholding the importance of vaccine equity, he said that “concrete steps should be taken” to waive intellectual property rights to increase vaccine production “and get rid of this virus as soon as possible”.
“The virus has taken the whole world hostage”, Tedros said. “The UN Security Council can do it, if there is political will”.
The Council resolution calls for review of specific cases raised by the UN, where access to vaccinations is being hampered and to “consider what further measures may be necessary to ensure such impediments are removed and hostilities paused.”
Tedros noted that Côte d’Ivoire had received its first doses of the COVID-19 vaccine with more to be shipped to other countries in the days and weeks ahead – with the goal of getting vaccination underway in all countries within the first 100 days of the year.
Crediting the UN-led vaccine initiative COVAX, he said that fragile progress has been made, but that vaccine supplies and distributions must be accelerated.
However, he warned against bilateral deals with manufacturers producing vaccines that COVAX is counting on.
“I understand full well that all governments have an obligation to protect their own people. But the best way to do that is by suppressing the virus everywhere at the same time”, underscored the WHO chief.
“Now is the time to use every tool to scale up production, including licensing and technology transfer, and where necessary, intellectual property waivers. If not now, then when?”, he added.
Yemen: ‘Opportunity for peace’
In a bid for more funding, the WHO chief said that Yemen remained the world’s largest humanitarian crisis, with more than 20 million people desperately needing assistance. Some five million are at risk of famine, while half a million children under-five risk death without urgent treatment and the continuing spectre of COVID-19.
This current crisis comes at a time, after years of conflict, when there is now a real opportunity for peace in Yemen. We have to act on it”, he said, urging donors to generously support the 2021 Response Plan for $3.85 billion during a High-Level Pledging Event next Monday.
Meanwhile, on Wednesday, WHO officially launched its Strategic Preparedness and Response Plan (SPRP) for 2021.
It builds on achievements, focuses on new challenges, such as mitigating risks related to new variants, and considers the road towards the safe, equitable and effective delivery of diagnostics and vaccines as part of the overall strategy to successfully tackle the pandemic, according to the WHO chief.
“The 2021 SPRP outlines how WHO will support countries in meeting these objectives, and the resources we need to do it”, he said.
Proud son of Ethiopia
During a separate ceremony, Tedros said he was “deeply humbled” to receive the African Person of the Year award.
“I do not accept this award only on my own behalf, but on behalf of my colleagues at WHO, who work every day, sometimes in difficult and dangerous situations, to protect and promote the health of Africa’s people, and the world’s”, he said.
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