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DEVELOPMENT FINANCE

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Agreements of the Group of Seven in its meeting early June has set the stage for even tougher fights ahead  for tax justice advocates in Asia and around the world campaigning for an overhaul of tax rules to reverse growing inequality and deepening poverty.   


“The G7 has decided on a tax deal among the richest 10 percent in the world for their exclusive benefit, aggressively eclipsing the global tax agenda ahead of the United Nations General Assembly, decried Lidy Nacpil of the Asian Peoples’ Movement on Debt and Development (APMDD), a member of the Tax and Fiscal Justice Asia (TAFJA) network.

“The much-vaunted pact hammered out by G7 finance ministers for a 15 percent global minimum corporate tax rate is nothing but an invitation to a race to the minimum,” says Hiroo Aoba who sits in the coordinating committee of TAFJA, representing Public Service International Asia- Pacific Office. He points out that business circles in such countries as Australia and Denmark have begun calling for lowering their corporate tax rates.


"The unacceptably low 15% minimum corporate tax rate seeks to disincentivize rich country corporations from shifting their profits from their home countries to low tax jurisdictions, but does not address the ability of the digital corporations to make tons of money in developing countries without paying corporate income tax there since they are supposedly not even present in those countries," explains Third World Network (TWN)  tax lawyer Tony Salvador.


“The international tax justice campaign has long called for at least 25 percent as a global minimum. A higher minimum could generate resources necessary to tackle social-economic crises triggered by the Covid-19 pandemic and to provide essential public services to people,” Aoba adds.  


Ah Maftuchan, executive director of the Jakarta-based think tank, PRAKARSA,  notes that research from Tax Justice Network, a group advocating transparency in international finance,  shows that a 25% minimum effective tax rate could raise US$780 billion in additional revenues worldwide.


“An alternative, fairer model for revenue-allocation proposed by civil society, known as METR, a Minimum Effective Tax Rate for multinationals, would provide non-G7 states with an additional US$355 billion,” notes Aoba.

A TAFJA member closely monitoring emerging rules on taxing the digital economy has raised another red flag. “We worry about the trajectory of the G7 statement, as it is consistent with efforts to GATTicize the power of sovereign nations to impose taxes, especially with respect to e-commerce and the digital economy. There are disturbing initiatives to impose an international tax legal framework where nations are forced to accept as normal the imposition of trade sanctions for simply exercising the sovereign right to tax. This is totally unacceptable,” says TWN’s Salvador.

He further emphasizes a fundamental principle: "The power of taxation is an essential attribute of a sovereign nation and its exercise emanates from its people and devolved upon the legislature of each nation. It should not be hindered even by international processes nor held hostage to the desires of big corporations domiciled in rich nations."


Lidy Nacpil is calling on tax justice advocates to press forward and fight for democratic mechanisms under the United Nation to address the global dimensions of tax abuses while upholding sovereignty of nations.  “With countries of the Global South most severely encumbered by foregone corporate tax revenues, we reiterate our call for a UN Tax Body towards more just and fair international tax rules.”


TAFJA is a regional network of the Global Alliance for Tax Justice GATJ), a growing movement of civil society organisations and activists, united in campaigning for greater transparency, democratic oversight and redistribution of wealth in national and global tax systems.

GATJ executive coordinator Dereje Alemayehu earlier denounced the agreements forged by the G7. “It’s a déjà vu! The G7 strikes a deal among themselves and paves the way for a manipulated endorsement as an international agreement in informal platforms created by their OECD, outside the UN system.”


He warned that “developing countries are then locked forever into an ‘international agreement’ with ‘binding and non-optional dispute resolution’ arrangements which will continue to deny them their taxing rights on part of global profit generated in their economies.”

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As the G7 Finance Ministers’ Meeting in London concluded with exalted acclaim from its member states on the “groundbreaking overhaul” of global tax rules, movements raised alarm bells against the impact of the G7 commitment to a 15% minimum global corporate tax rate. Finance Ministers of the Group of 7 (G7) – composed of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – meet annually ahead of the G7 Summit attended by heads of state.

“The G7 commitment setting a global minimum corporate tax rate of 15% is a highly regressive and undemocratic blow to the clamor for tax justice by peoples in the Global South,” says Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD). “90% of the world’s population stand to suffer the consequences of a decision by the richest 10%.”


APMDD’s statement follow the report released by the United Nations High Level Panel on International Financial Accountability, Transparency and Integrity (UN FACTI) in February 2021, recommending a global minimum tax rate of at least 25-30% of corporate profits to ensure a high enough amount for equitable redistribution of recovered revenues that can be used to fund essential public services and long-term sustainable development.


“Global South countries lose $427 billion in tax revenues and 52% of their combined public health budget yearly from corporate tax abuses, striking at a critical time for fiscal systems that are at near collapse due to debt for pandemic relief and the lethal costs of the vaccine apartheid engineered by countries in the Global North,” Nacpil adds, citing the findings of The State of Tax Justice 2020, a study documenting the tremendous disparity in the impacts of corporate tax abuses on public health systems between countries in the G7 and the developing world. 


The UN FACTI Report also recommended the establishment of a tax body on the level of the United Nations where all countries are represented on an equal basis. Nacpil calls attention to the G7’s attempt to frame the agenda on global tax reform ahead of the UN Convention:“the G7’s systematic attempt to steer the direction of global tax rules to further their interests and benefits represents a blatant disregard for the disproportionate burden of foregone revenues borne by peoples in the Global South”


When asked on their proposed alternative to the G7 deal and the incoming G20 Summit, Nacpil reiterates APMDD’s longstanding demands. “We reject the rules set by an exclusionary rich man’s club’ for the rest of the world. We call on world leaders, leaders of developing countries, and civil society to fight for a just agreement through a UN Tax Convention and for an inclusive, democratic and transparent UN Tax Body.”

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REWRITE THE RULES

APMDD’s Campaign on Tax, Women’s Rights and Gender Justice

REWRITE THE RULES! MAKE TAXES WORK FOR WOMEN!


The campaign for tax and gender justice is one of APMDD’s priorities in its work on Development Finance. Tax and fiscal systems are embedded in deeply entrenched patriarchal systems, structures, social norms and practices. They  reflect direct and indirect gender biases and assumptions – in many countries in Asia, tax systems do not recognize women as independent economic agents or as heads of households. Unpaid care work, largely borne by women, are not accounted for and are rendered invisible in tax and fiscal policies. Women, especially those from poor and marginalized sectors,  take on a disproportionate share of the negative impacts of regressive and discriminatory tax and fiscal policies, and have the least voice, power and influence in decision-making on these policies. It is widely known that indirect taxes such as the Value Added Tax (VAT) or the Goods and Services Tax (GST) hurt women and the poor the most.  This is because women tend to earn less and are over-represented in the informal economy, have less access to and control over land, financial resources and other productive assets necessary for their economic survival and independence. And yet women tend to spend a greater share of their income for household necessities.

 

Women are also exposed to multiple forms of gender-based violence at home, in the world of work and in times of natural disasters and emergencies, but have less access to public services essential to their survival and to living a life of dignity. Where public services are available, they are often inaccessible to women in marginalized communities or remote areas or are unresponsive to their specific needs and conditions. Corporate tax abuses and illicit financial flows that rob economies of revenues that could and should be used for public services negatively  impact on women’s lives.  

 

Tax and fiscal policies should not be used as instruments for reinforcing inequalities; rather, they should be transformed into tools for addressing inequalities and advancing gender  justice. Women have stood and continue to stand in the frontlines of collective action for economic and gender justice, increasingly taking on tax and fiscal justice as integral to this campaign agenda. 

 

While APMDD has been taking on tax and gender justice as part of its campaign and advocacy agenda for many years now, a more systematic campaign was launched in 2019 under the banner theme, “Make Taxes Work for Women” 

 

The campaign objectives are :

1. Work towards reducing unfair tax burdens on women and ending discrimination in tax policies by:

  • raising public awareness about regressive and discriminatory tax policies;
  • building support for progressive and gender-responsive tax and fiscal policy reforms, especially policies that serve to represent, recognize, redistribute and reduce unpaid care work;
  • campaigning for increased allocation of tax revenues for quality, gender-responsive public services. 

2. Expose the flaws of domestic and international tax systems and policies that enable corporate tax abuses and illicit financial flaws, and work towards policy, institutional and structural changes in support of progressive and just taxation by:

  • Raising public awareness about corporate tax abuses and illicit financial flows and their gendered impacts and implications for women’s human rights;
  • Increasing the visibility of ‘tax and gender’ policy recommendations and feminist articulations recommendations in national, regional and global platforms; and
  • Building support for the establishment of transparent and democratic intergovernmental tax commission with sufficient resources under the United Nations, to ensure that all countries can participate on a truly equal footing in the decision-making on global tax rules.

3. Build the power of activists around the world to campaign against gender discrimination and tax injustice, and urge the public and the women’s movements to take on tax justice issues as an integral part of the struggle for women’s rights and economic empowerment.

  • Increase and strengthen women’s participation and leadership, especially from the grassroots, in movements for tax and economic justice;
  • Strengthen capacities of social movements, grassroots organisations, and other CSOs to campaign against gender discrimination and tax injustice;
  • Build and strengthen a core of women leaders from among grassroots organisations, social movements and other CSOs who will advance and sharpen feminist analyses and articulations, and help sustain the work around tax and gender justice;
  • Mobilize gender champions in parliament and academia, and build support from decision makers.

 

Key Demands

Reduce unfair tax burdens on women

Remove gender biases and discriminatory provisions in tax and fiscal policies

Recognize, represent, reduce and redistribute unpaid care work

Increase tax allocation for quality, gender-responsive public services

Stop corporate tax abuses, stop illicit financial flows (IFFs). Establish an inclusive, democratic, transparent and equitable inter-governmental mechanism for tax cooperation under the auspices of the United Nations

 

Key Activities in the Campaign on Tax, Women's Rights and Gender Justice (2021-2022)

Organizing and Country Consultations

Focus will be on setting up and consolidating a Campaign Committee and continuing regional and country consultations to develop  campaigns and support country activities.

Training

This involves mainly orientation sessions on Framing Feminist Taxation and Campaign and Advocacy Training, including legislative/policy advocacy and communications training.

Advocacy

Key advocacy moments include


Asian Women’s Day, 8 August, initiated by APMDD in 2019; 

“16 Days of Activism against Gender-Based Violence” – 16 Nov-10 December; 

Women’s Month, International Women’s Day (March 8);


Global Days of Action to “Make Taxes Work for Women”; 

and, the UN Commission on the Status of Women session in March. 


There are also social media actions and activities such as 8for8, our social media campaign with theTAFJA Tax and Gender Group every 8th of the month to bring attention to our demands for tax and gender justice and “Our Stories”, a comic strip created with young female artists. 

Research

Situation and issue analysis on “’Burdens’, Biases, and Budgets”

‘Burdens’ – Gathering data and information to monitor the situation of women and analyze the multiple burden of women, through an economic and gender justice lens, looking at multiple and intersecting forms of discrimination (e.g. women’s social and economic situation, including health and care work, exposure to multiple forms of violence especially economic violence; access to public services)

‘Biases’ – Surfacing, identifying, analyzing direct and indirect biases in tax policies (e.g. impacts and implications of regressive tax policies like VAT/GST; discriminatory policies)

‘Budgets’ Data gathering, monitoring, analysing national (or local) budgets and fiscal policy in general through the lens of tax and gender justice; e.g. public spending for health (particularly women’s health); care work; and. how gender-responsive are national and local budgets, including looking at women’s participation and influence in decision-making on budgets.

Tax, Illicit Financial Flows and Inequalities

Engaging Parliamentarians and Mobilizing Women Parliamentarians

APMDD will engage parliamentary groups and women parliamentarians to advocate for the institutional adoption of tax and gender justice in their legislative programs and priorities.  Progressive tax reforms to be supported include the elimination of value added taxes, introduction of wealth taxes, and, implementation of tax incentives reviews.

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APMDD Campaign on Tax Justice in the Extractives Industry

Built on centuries of environmental pillage and wealth extraction in mineral-rich areas, the extractive industry has historically thrived in environments of financial secrecy, corruption, tax abuses and other illicit financial flows (IFFs). Social movements and mining-affected communities have long been waging fierce campaigns directed at the extractive industry, especially in the mines and mineral sector, calling attention to the destruction of livelihoods, unjust labor policies, environmental impacts, among others. 

 

There is an urgent need to stop abusive practices by corporations in the extractive industry such as tax avoidance and leakages in domestic resource mobilization due to tax privileges and other incentives given to the extractives industry.  This should be part of a thoroughgoing critique of regressive tax systems that heavily favor corporate and elite interests and enable illicit financial flows. Because of these abusive practices, the extractive industry not only contributes to the destruction of community livelihoods and the environment, and to increased exposure to climate change and its impacts, it is also a major factor in draining economies of the Global South of foregone revenues that could and should be used for funding public services. 


APMDD’s campaign for tax justice in the extractives industry is based on the following key assertions:

As part of the shift away from EXTRACTIVISM, which is a key feature of the capitalist system

 

A major aim of our campaign on tax and extractives is exposing and resisting EXTRACTIVISM – exploitation, plunder, and destruction of natural resources to the huge detriment of people, communities and the planet – which is primarily driven by corporations, especially MNCs, in collusion with local elites, governments, and international financial institutions (IFIs) – in order to fundamentally reorient our economies towards prioritizing people and the planet.

 

As part of the fight against flaws of the tax system, abusive tax practices, and illicit financial flows that erode public revenues and pave the way for intense profiteering of corporations – especially of MNCs

 

The campaign is aimed at exposing the flaws of domestic and international tax systems and policies, the tax abuses of corporations - especially MNCs in oil, gas and mineral industries – that result in massive erosion of public revenues and intense profiteering at huge costs to people, communities, workers, the economies, and environment of Asian countries.  It aims to achieve political (or other) wins, which shall serve to weaken the ability of corporations for IFFs, for plunder and greater accumulation of profits.

 

As part of the struggle for the democratization and redistribution of wealth and resources

 

The campaign for tax and fiscal justice, of which curbing illicit financial flows forms an important part, is in line with the peoples’ struggle for sustainable, democratic access to and control over wealth and natural resources. The campaign also aims at strengthening the voices of local communities, calling on governments to uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.

 

As part of efforts to effect changes in norms and standards, laws, and policies 

 

  • to correct flaws in the tax system that diminish tax revenues from extractives industries and allow/facilitate tax avoidance and abuses by corporations;
  • to curb and penalize tax abuses and tax avoidance by corporations and illicit financial flows from the extractive industries;
  • to transform regulatory mechanisms over the extractives industry at different levels of governance;
  • to build and shape strong public opinion towards seeking tax and fiscal justice for tax abuses in mining and other extractivist activities; and
  • to strengthen movements and linkages among movements, build convergences and synergies across campaigns on IFFs, tax incentives, and public spending with human rights, gender justice, climate justice.

 

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Ten Demands for Tax Justice in the Extractives Industry

The campaign advances the following demands:

  1. Scrap tax incentives granted to extractives industries and curb illicit financial flows.
  2. Impose resource taxes on the export of raw materials from mining and other extractivist activities.
  3. Ensure financial transparency of and accountability from corporations in the extractive industries.
  4. Hold governments/parliaments, sub-national state bodies and their agencies to account for the tax abuses of mining companies and the complicity of local elites.
  5. Shut down harmful and abusive mining projects/companies.
  6. Institute and enforce tighter social, financial and environmental regulations and sanctions over the extractives sector.
  7. Cancel fiscal stability and other lock-in clauses in agreements with extractive industries, which restrict the fiscal and regulatory space of governments.
  8. Uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.
  9. Stop the plunder and exploitation of natural and human resources and move away from reliance on extractivist economies characterized by over-production and over-consumption.
  10. End the impunity of corporations in mining and other extractives industries in their tax abusive practices, including illicit financial flows.

 

Key Activities in the Campaign on Tax Justice in the Extractives Industry (2019-2021)

RESEARCH: 

 

Primer on Potential Channels for Revenue Erosion, Profit Shifting, and Illicit Financial Flows in the Philippine Mining Industry

Through a research initiative, APMDD developed a comprehensive account of the institutional and legal environment that enables illicit financial flows in the Philippine extractives industry. The primer also presented cases of how this environment enabled abusive tax practices of three mining corporations in the Philippines.

 

Research on Harmful and Abusive Tax Incentives in Asia

As part of the Financial Transparency Coalition (FTC) Report entitled “Use and Abuse of Tax Breaks: How Tax Incentives Become Harmful,” APMDD conducted a case study on an Indonesian coal mining corporation to illustrate the channels through which fiscal incentives embedded in government-awarded mining agreements become vehicles of cross-border profit-shifting and tax avoidance.

 

DEEPENING UNITIES with members and partners on a campaign and advocacy agenda

 

APMDD participated and led activities in the Global Days of Action on Tax and Extractives as part of the Global Alliance for Tax Justice (GATJ) from November 2019 until November 2021. APMDD is also one of the convenors of the Tax and Fiscal Justice Asia (TAFJA) Tax and Extractives Working Group, which has held press briefings and discussions on tax justice issues in India, Indonesia, and the Philippines.

 

Together with the Tax and Fiscal Justice-Asia (TAFJA), and with the Alternative Information & Development Centre (AIDC) in South Africa and Churches and Mining Network (CaM) in Brazil, APMDD has co-organized webinars and information dissemination activities to promote demands of tax justice in the extractive industry in regional and global arenas. 

 

PARTNERSHIPS with labor groups and communities to work together on tax and labor abuses in the extractives industry

 

Efforts to build constituencies in linking issues of tax abuses and violations of workers’ rights by mining corporations were strengthened in 2021, as APMDD co-organized the Asian Day of Action in November 2021 with workers’ movements jointly calling for strengthening tax and labor regulations in the industry.


APMDD continues to support country-level campaigns and advocacy work, with a view of holding mining corporations to account, ensuring financial transparency, and strengthening local communities’ voices in calls to transform tax and fiscal systems governing the extractives industry.

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#8for8 Campaign: Make Taxes Work for Women

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