As states set sights on inequality, it’s time to get fiscal

February 24th, 2014

One after another, government representatives meeting at the UN in New York earlier this month reiterated their determination to combat rampant inequality. While those present for the eighth session of the Open Working Group (OWG) on the Sustainable Development Goals voiced different opinions about what exactly this might involve, all recognized that the new set of goals should confront inequality in a more robust and comprehensive manner than the Millennium Development Goals they are to replace.

The OWG recognized gender inequality as one of the most pervasive forms of inequality. There was widespread support for a stand-alone goal to address the many fronts on which women face discrimination, from access to land to sexual and reproductive rights, and to address the structural causes of inequality. This would be supplemented by cross-cutting equality targets under all other goals. Many states argued that the new goals should also give particular attention to other disadvantaged groups such as persons with disabilities, indigenous peoples, children, youth and older persons, whose rights and perspectives were largely overlooked in the MDGs.

Significantly, governments of North and South recognized that rising income inequality — both within and between nations—is threatening social cohesion, destabilizing economies and damaging our ecology, and therefore constitutes a major obstacle to sustainable development. Bolivia, speaking on behalf of the G77 group of developing countries, and the European Union Development Commissioner representing all EU member states, both called for an explicit global commitment under the SDGs to reverse this disturbing trend.

This breakthrough indicates that the injustice of inequality–which has prompted millions worldwide to take to the streets in recent years—is an issue whose time has finally come at the UN. Indeed as CESR has argued, reducing stark income inequalities is not only an economic necessity and a development imperative; it is a matter of justice and a human rights obligation.

Inequality: a taxing issue

CESR's work in different contexts has shown how widening socio-economic disparities have been fuelled across the globe by unfair fiscal policies which protect the privileges of wealthy elites at the expense of the rights of ordinary people. Inadequate, inequitable and opaque tax policies lie at the root of escalating inequality in post-crisis Spain, shocking development disparities in Guatemala, deepening levels of poverty in post-revolution Egypt, and record levels of wealth concentration in the United States. In each of these very different contexts, the poorest are getting hit doubly hard: contributing disproportionately to the public coffers while simultaneously bearing the brunt of public spending cuts and reduced social protection schemes.

If governments are serious about halting the trend of widening inequality within and between states, the post-2015 sustainable development agenda will need to tackle the injustices of our current tax and fiscal systems. The agenda must include a series of sweeping commitments by governments to restore equitable public financing as the foundation of the social contract and the public’s trust in government. This should involve commitments to provide for full transparency, participation, oversight and accountability for how public monies are raised and spent. In line with existing obligations, governments should commit to increasing spending on essential public services at the heart of sustainable development. Moreoever, governments with insufficient revenue to resource sustainable development should commit to increase their tax base through more progressive and equitable forms of revenue generation. And finally, all governments, especially those playing host to offshore tax havens, must commit to a zero-tolerance approach to tax evasion, and commit to working with other governments to decrease illicit financial flows, and to prevent tax competition which is systematically undermining human rights and sustainable development. These are some of the concrete demands of civil society advocates, including CESR, who are working to secure stronger commitments to fiscal justice as part of the post-2015 agenda.

As the OWG debates took place in New York, many of these activists were engaged in discussions five thousand miles away in Accra (Ghana) on fairer taxation as a strategy for reversing extreme inequalities. CESR joined tax justice activists and fiscal policy experts from across Africa and beyond, brought together by Tax Justice Network-Africa and Oxfam for an International Conference on Fiscal Justice on 4-8 February. Participants explored strategies for boosting domestic resources more equitably and redistributing economic gains so as to reduce inequalities. They also explored synergies to combat cross-border tax abuse and eliminate inequities in the global tax regime which are depriving many countries of the resources they need to meet their development and human rights commitments.

The meeting also explored how human rights tools and standards could help to strengthen public accountability over fiscal policy, including in the post-2015 context. Human rights have much to say about the measures states must take to ensure substantive equality. As well as eliminating discriminatory barriers in law and practice, governments must put in place redistributive fiscal policies that enable them to draw as fully as possible on the resources they need to reduce unjust socio-economic disparities and to create the conditions in which all can enjoy their economic and social rights on an equal footing. Governments also have obligations to cooperate in the fulfillment of human rights across borders, including by ensuring their tax policies and practices do not harm the capacity of other states to meet their human rights obligations towards their own people.

Getting fiscal post-2015

The OWG sessions in New York have affirmed a growing consensus among governments that the post-2015 framework must be based on international human rights principles, including the fundamental principles of equality and non-discrimination. This consensus was neatly encapsulated at the eighth OWG session by the UN Population Fund's Executive Director Babatunde Osotimehin, who stated that: “There is no development without human rights”. It now remains to be seen whether states will recognize that these human rights principles have direct implications for the fiscal commitments to be included in the post-2015 agenda.

Summarizing the outcomes of the inequality discussions, the OWG co-chairs acknowledged that "economic policies have an important role to play in relation to promoting greater equality of outcomes, notably using the taxing and spending powers of government to mitigate and redress inequality." As the OWG sets about drawing up concrete proposals for the new global development framework, and as the International Committee of Experts on Sustainable Development Financing prepares its recommendations for how this framework should be resourced, CESR and its partners will be working to ensure that the Sustainable Development Goals include firm and actionable commitments on fiscal policy reform at the national and global level. Without these, the Open Working Group's laudable commitments to reducing inequality and realizing rights will soon ring hollow.