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.”
First international treaty to address violence and harassment comes into force
The first international treaty on violence and harassment in the world of work comes into force on June 25th 2021 – two years after it was adopted by the ILO’s International Labour Conference (ILC).
To date, six countries have ratified the Violence and Harassment Convention, 2019 (No. 190) – Argentina, Ecuador, Fiji, Namibia, Somalia and Uruguay. Ratifying countries are legally bound by the provisions of the Convention a year after ratification.
Together with Recommendation No. 206 , Convention No. 190 recognizes the right of everyone to a world of work free from violence and harassment and provides a common framework for action.
It provides the first international definition of violence and harassment in the world of work, including gender-based violence and harassment.
Violence and harassment at work takes a range of forms and leads to physical, psychological, sexual and economic harm. Since the adoption of the Convention, the COVID-19 pandemic has further highlighted the issue, with many forms of work-related violence and harassment being reported across countries since the outbreak began, particularly against women and vulnerable groups.
To mark its entering into force the ILO will launch a global campaign to promote its ratification and implementation. The campaign aims to explain in simple terms what the Convention is, the issues it covers and how it seeks to address violence and harassment in the world of work.
“A better future of work is free of violence and harassment,” said Guy Ryder, the ILO Director-General in his message to launch the global campaign.
“Convention 190 calls on all ILO Member States to eradicate violence and harassment in all its forms from the world of work. I urge countries to ratify the Convention and help build, together with employers and workers and their organizations, a dignified, safe and healthy working life for all.”
The global campaign will be launched during the ILO Action Week on Convention No. 190 , which takes place 21-25 June 2021.
The Action Week calls for renewed commitment from countries to ratify and implement the Convention.
The Action Week begins on 21 June with a virtual high-level dialogue . The speakers will include the ILO Director-General, Ministers of Labour from Argentina and Madagascar, and representatives of the International Organisation of Employers (IOE), the International Trade Union Confederation (ITUC) and the Inter-Parliamentary Union (IPU).
Following the Action Week, the ILO will launch a guide aimed at helping constituents and other stakeholders promote and implement the Convention and Recommendation. The guide covers core principles and measures that countries can take to prevent, address and eliminate violence and harassment in the world of work, including examples of national laws, regulations and policies.
Famine risk spikes amid conflict, COVID-19 and funding gaps
The impact of conflicts old and new, climate shocks and COVID-19, in addition to a lack of funding, have left millions more on the verge of famine than six months ago, the World Food Programme (WFP) said on Friday.
In an appeal for $5 billion “to avoid famine” and support the “biggest operation in its history”, WFP spokesperson Phiri Tomson said that millions of refugees faced “uncertainty and hunger” as the impact of the pandemic on emergency aid budgets became clearer.
“The number of people teetering on the brink of famine has risen from 34 million projected at the beginning of the year, to 41 million projected as of June”, he said. “Without immediate emergency food assistance, they too face starvation, as the slightest shock will push them over the cliff into famine conditions.”
From bad to worse
According to the latest IPC food insecurity assessments – which humanitarians use to assess needs on a scale of one to five – the 41 million “are people who are in IPC phase 4 – emergency”, the WFP spokesperson explained.
New refugee influxes linked to conflict and drought have increased needs for people in “IPC phase 5 – catastrophe” and “that number stands at 584,000 people”, Mr. Phiri continued. “These are people in Ethiopia’s Tigray region, Madagascar, particularly the southern part; South Sudan, especially as we are now at the height of the lean season in that country, and Yemen.”
Launching its Global Operational Response Plan, the UN agency highlighted operations in no less than eight countries and regions where it has had to make “brutal choices” because of significant funding shortfalls.
In practice, this has meant reduced rations “across east and southern Africa, as well as the Middle East…among some of the world’s most vulnerable people who rely on WFP to survive”, said Mr. Phiri.
“In some cases it’s 40 per cent, in some cases it’s 25 per cent, in some cases it’s 60 per cent…The fact is, the assistance we provide is a basic need, the assistance we provide is just enough to help people get by.”
West and Central Africa in crisis
For many vulnerable aid recipients in West and Central Africa, the COVID-19 pandemic has left them without the opportunity to work to supplement their rations and unable to pay for increasingly expensive staple foods. “Countries like Chad, Niger and Burkina, Mauritania; these are all countries of concern, including Sierra Leone as well,” said Mr. Phiri, after a warning by the UN agency that the world was no longer moving towards Zero Hunger.
“Progress has stalled, reversed, and today, more than 270 million people are estimated to be acutely food insecure or at high risk in 2021,” it said in a statement.
Forced displacement at record level, despite COVID shutdowns
The number of people fleeing wars, violence, persecution, and human rights violations, rose last year to nearly 82.4 million people, a further four percent increase on top of the already record-high of 79.5 million, recorded at the end of 2019.
According to the UN Refugee Agency flagship Global Trends Report published on Friday, the restrictive COVID-19 pandemic did not slow forced displacement around the world, and instead could have left thousands of refugees and asylum seekers stranded and vulnerable.
The new ‘one percent’
Despite COVID-related movement restrictions and pleas from the international community for a concerted global ceasefire, displacement continued to occur – and to grow. As a result, more than one percent of the world’s population – or 1 in 95 people – is now forcibly displaced. This compares with 1 in 159 in 2010.
The agency explains that while the full impact of the pandemic on wider cross-border migration and displacement globally is not yet clear, data shows that arrivals of new refugees and asylum-seekers were sharply down in most regions – about 1.5 million fewer people than would have been expected in non-COVID circumstances, reflecting how many of those seeking international protection in 2020 became stranded.
New and old crises
According to UNHCR, several crises – some new, some longstanding and some resurfacing after years – forced 11.2 million people to flee in 2020, compared to 11.0 million in 2019.
The figure includes people displaced for the first time as well as people displaced repeatedly, both within and beyond countries’ borders.
By the end of 2020, there were 20.7 million refugees under UNHCR’s mandate. Another 48 million people were internally displaced (IDPs) within their own countries.
Driven mostly by crises in Ethiopia, Sudan, Sahel countries, Mozambique, Yemen, Afghanistan and Colombia, the number of internally displaced people rose by more than 2.3 million.
When considering only international displacement situations, Syria topped the list with 6.8 million people, followed by Venezuela with 4.9 million. Afghanistan and South Sudan came next, with 2.8 and 2.2 million respectively.
Turkey continued to host the largest number of refugees with just under 4 million, most of whom were Syrian refugees (92%). Colombia followed, hosting over 1.7 million displaced Venezuelans.
Germany hosted the third-largest population – almost 1.5 million, with Syrian refugees and asylum-seekers as the largest group (44%). Pakistan and Uganda completed the top-5 hosting countries, with about 1.4 million each.
The COVID-19 crisis also hit the forcibly displaced hard, who faced increased food and economic insecurity as well as challenges to access health and protection services.
At the peak of the last year, over 160 countries had closed their borders, with 99 States making no exception for people seeking protection.
According to UNHCR, the dynamics of poverty, food insecurity, climate change, conflict and displacement are increasingly interconnected and mutually reinforcing, driving more and more people to search for safety and security.
A call to end the suffering
UNHCR is urging world leaders to step up their efforts to foster peace, stability and cooperation in order to halt and begin reversing nearly a decade-long trend of surging displacement driven by violence and persecution.
“Behind each number is a person forced from their home and a story of displacement, dispossession and suffering. They merit our attention and support not just with humanitarian aid, but in finding solutions to their plight”, reminded the UN High Commissioner for Refugees, Filippo Grandi.
In a statement, Mr. Grandi underscored that while the 1951 Refugee Convention and the Global Compact on Refugees provide the legal framework and tools to respond to displacement, a much greater political will is needed to address conflicts and persecution that force people to flee.
“The tragedy of so many children being born into exile should be reason enough to make far greater efforts to prevent and end conflict and violence,” he added.
Girls and boys under the age of 18 account for 42 percent of all forcibly displaced. They are particularly vulnerable, especially when crises continue for years.
New UNHCR estimates show that almost one million children were born as refugees between 2018 and 2020. Many of them may remain refugees for years to come.
Low rate of return
The agency emphasized that over the course of 2020, some 3.2 million internally displaced and just 251,000 refugees returned to their homes –a 40 and 21 percent drop, respectively, compared to 2019. Another 33,800 refugees were naturalized by their countries of asylum.
Refugee resettlement registered a drastic plunge with just 34,400 refugees resettled, the lowest level in 20 years – a consequence of a reduced number of resettlement places and COVID-19.
“Solutions require global leaders and those with influence to put aside their differences, end an egoistic approach to politics, and instead focus on preventing and solving conflict and ensuring respect for human rights,” urged Grandi.
The UN Refugee agency reminded that 2020 is the ninth year of uninterrupted rise in forced displacement worldwide. There are twice as many forcibly displaced people than in 2011 when the total was just under 40 million.
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