This is, by the way, a very modern idea. For much of recent history people were essentially prisoners in their countries of origin. In 19th century Prussia no one (not even foreigners) was allowed to leave the country without authorization. It took the French revolution to remove a 1669 edict of the king that forbid the French from leaving France. In 1720 the parliament of Great Britain banned seamen, artisans and other workers from emigrating to the American colonies. This was revoked apparently only in 1824. Even the U.S. right after the Civil War saw attempts to control the movement of black workers out of southern states via a system of pass controls (papers that showed their employment status) which made it harder for them to circulate within the U.S. The next time you hear a native citizen beating his chest and proclaiming, "My ancestors have been here for X generations!" just bear in mind that his forefathers weren't necessarily there because they wanted to be. They stayed because they weren't allowed to leave.
Fast forward to the 20th century and two documents: The Universal Declaration of Human Rights (1948) and The International Covenant on Civil and Political Rights (1966). Article 13 of the first says:
1. Everyone has the right to freedom of movement and residence within the borders of each State.
2. Everyone has the right to leave any country, including his own, and to return to his country.
Article 12 of the second document, the ICCPR, has similar language but does allow certain restrictions:
1. Everyone lawfully within the territory of a State shall, within that territory, have the right to liberty of movement and freedom to choose his residence.
2. Everyone shall be free to leave any country, including his own.
3. The above-mentioned rights shall not be subject to any restrictions except those which are provided by law, are necessary to protect national security, public order (ordre public), public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in the present Covenant.
4. No one shall be arbitrarily deprived of the right to enter his own country.
The rights and restrictions were clarified in the Siracusa Principles (1984) and in General Comment No. 27 (1999). Where there are restrictions a state must show that they fall within one of the categories (line 3) and that they are proportionate: "They must be appropriate to achieve their protective function; they must be the least intrusive instrument amongst those which might achieve the desired result; and they must be proportionate to the interest to be protected."
So, yes, under certain circumstances states do retain limited rights to prevent people from emigrating. Some have gone so far as to argue that such restrictions should be placed, for example, on health professionals leaving developing countries for Europe or the U.S. These countries are, after all, in a "state of emergency." The question of whether or not states can, under international law and under certain circumstances, levy a penalty, a fee or a tax on people who wish to emigrate is not clear to me. If anyone has better research, please feel free to point me in the right direction. One country that is under fire for violations of the ICCPR, is Eritrea. They have been censured for preventing people from leaving the country by making passports very expensive or by requiring exit visas in order to leave the territory for whatever reason. This report by the U.S. State Department says that, "Some citizens were given exit visas only after posting bonds of approximately 150,000 nakfa ($10,000) or more." Eritrean citizens already abroad who came home for a visit had to prove that they had paid the diaspora tax of 2% in order to be able to leave the country again. Reading the media reports, the general consensus of the international community seems to have been that these methods were gross and grotesque violations of basic human rights.
And yet, fees or penalties or taxes on outbound human traffic from one state to another are alive and well in the 21st century. A surprising number of states do, in fact, have some sort of mechanism for shaking down people who leave a territory. The simplest and most common is the Departure Tax (also called Airport Exit Tax). Most countries in Europe have them. Canada and Australia too. Sometimes these are simply rolled into the price of the plane ticket. In other countries, it is payable in cash and you get a little sticker or stamp saying it was paid. As annoying as these may be, they are clearly not attempts to stop people from leaving. If you can afford the price of a ticket to Australia then surely you can afford to pay 55 AUD to leave. In general when we say "exit tax" we are not talking about these kinds of fees which have nothing to do with emigration. So let's define the term more precisely.
An exit tax is a tax that is levied against an individual or a corporation who wishes to transfer residency or citizenship from one country to another. It is a tax on emigration and/or expatriation. How does it work and what is its purpose?:
In general, ET [Exit Taxation] aims at levying the potential or latent gains (also called “hidden reserves”) related with the assets that an individual, a company or a PE located in a given country, economically (eg., through allocation to a foreign PE of a trademark or a shareholding), or physically transfer to another tax jurisdiction. A first feature of ET is, thus, related with the fact that it is imposed when no asset disposal takes place, and no revenue is generated.What might that mean for an individual? Let's say an individual wishes to move from Country A to Country B more or less permanently. Country B will become their new "tax home." Country A will take note and will act as if that person sold all of his/her assets the day before the person officially leaves. Nothing is actually sold but Country A will act as if it was and levy a tax. This is called Mark to Market and Phil Hodgen has a very good explanation here of how this works. No actual revenue is generated for the individual (the "sale" is virtual) and that person may very well be in 100% compliance with Country A's tax laws. So this is extra tax on top of taxes that have already been paid on those assets and it's the act of leaving that triggers it.
How common is this? Fairly common for corporations in Europe. In fact the Euro-zone is something of a hotbed of political/legal action in this area. Lots of European companies want (and theoretically have) "Freedom of Establishment" - the right to move as they like within the EU. One case that is most often cited in this regard is the National Grid Indus decision by the European Court of Justice in 2011. In the year 2000 the Dutch company National Grid Indus moved their management to the U.K and that triggered a Dutch exit tax. The ECJ ruled that NGI had the right to make the move, that the exit tax was not applicable in their case because they still remained a Dutch company but, as KMPG explains here:
The ECJ also concluded that imposing an exit tax may be justified by the need to ensure a balanced allocation of taxing rights between Member States. However, the ECJ noted that the proportionality of the Dutch exit tax should be reviewed in order to determine the compatibility of such a measure with EU law. In order to do so, a distinction must be drawn between the moment when the tax liability is determined and the moment when it is settled.The ECJ basically said that exit taxes for corporations are OK within the EU. However, the tax has to be proportionate (not too much of a burden) and corporations must be allowed to defer payment.
What about individuals (also called "natural persons")? Again, it is more common than you might think. This Country Tax System Matrix lists the following countries as having some sort of exit tax for individuals who leave the territory or renounce citizenship: Australia, Canada, Denmark, Germany, Israel, Italy, Luxembourg (inheritance tax), The Netherlands, and The United States. I cannot vouch for the validity of this information since this is not at all my area of expertise. There are surely more - this list does not cover all of the 190+ countries in the world. It also only contains information up to 2010 and does not include the new French Exit Tax which went into effect in 2012. But it does show that exit taxes for individuals are not at all uncommon and it should be noted that within the EU the principle of exit taxation for individuals has been held to be legitimate provided that there is no immediate tax charge and that the sums are not abusive or disproportionate.
What is interesting is that 1. most citizens are unaware that their countries do levy such taxes and 2. they tend to target high-net-worth individuals so when citizens are made aware of them their robust support for the "freedom to leave" is overcome by their desire to make the rich pay for abandoning them.
A desire for revenge is not only a very ugly emotion, it is not usually a good legal or philosophical basis for taxing people. It's also very rare to see a politician or a "homelander" admit to a desire to stop or slow down the free emigration of individuals and corporations. There is an underlying respect for the idea of freedom of movement that most people feel in their bones. Not even the most rabid anti-emigration native would come out and say openly that that ability of people to move to another country (provided they are welcome in a receiving state) should be restricted. The debate tends to revolve more around the idea of compensation. The focus is on what the state of origin loses when these people and their companies leave: tax revenue, jobs, professional qualifications honed at a local university, entrepreneurial talent. When it comes to company migration, this dissertation by a Portuguese lawyer summed up this position quite nicely in the conclusion:
Despite the serious doubts expressed in the previous paragraph about whether ET [Exit Taxation] can really be justified in an EU setting, namely on the basis of BATP, we have to concede that company migration may be a domain considerably prone to abuse and also that some form of compensation of benefits provided by the origin state - or better put, a reward for the contribution of the origin state to the profitability of the migrant company up to exit - should be put in place. This would not amount to accepting a restriction without justification but rather recognizing that such compensation is justified as a way to uphold the legitimate right of a state to quell tax base erosion schemes.Similar arguments are made about human capital but it's a bit harder to get people to accept them because we are talking about human beings ( a group that we all belong to). Penalizing someone monetarily for the act of leaving one's country of origin (or residency) is not terribly consistent with the ICCPR or the UN Declaration of Human Rights. And the fact that someone is rich (which is a very relative term) should not ever ever mean that they are deprived of their human rights.
If compensation of benefits is the primary goal, that has some very interesting implications for all emigrants. How can a state quantify those benefits? Should every individual leaving a country reimburse it for the cost of public education (primary through university) or police and fire protection for the period he was resident? Should a person be taxed if he takes his or her children (thus depriving the nation of future taxpayers) to another country? Is that parent engaged in the abusive practice of "eroding the tax base?"
The last is, I admit, a very extreme example but I stand by my suspicion that allowing states to determine just compensation for benefits received and holding people hostage until they pay up is a form of indentured servitude and a potential nightmare for would-be emigrants. What a mighty sword to put in states' hands to use in the battle to control international migration.
Enough said. I would love to hear your take on it.