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Wednesday, January 14, 2015

Human Rights and Taxation

Good link was posted up on Allison Christian's blog (Tax, Society and Culture) today:   Report of the Special Rapporteur on Extreme Poverty and Human Rights.  Twenty or so pages about tax systems, tax evasion, and international cooperation on fiscal matters and she tries to demonstrate how these things are also human rights issues.  An interesting read.

I was very pleased to see that she adressed one issue that is close to my heart:  transparency and representation in the making of tax policy.  Here is what Ms. Magdalena Sepulveda Carmona has to say:
"22. Decision-making processes regarding tax and public revenues must therefore be based on full transparency and the broadest possible national dialogue, with effective and meaningful participation of civil society and those who will be directly affected by such policies, including people living in poverty. Fiscal policies should be subjected to the scrutiny of the population during design, implementation and evaluation stages, with the various interests transparently identified. This will require capacity-building and fostering fiscal literacy in the population. The population should have access to all relevant information in an accessible and understandable format, and inclusive mechanisms should be put in place to ensure that they are actively engaged in devising the most appropriate policy options. Owing to the asymmetries of power, expertise and interests in this debate, specific measures should be taken to ensure equal access and opportunities to participate, particularly for people living in poverty."
Not only is this true on a national level (the US, for example) but it is triply true on the international level.  I know from hard experience that when such things are discussed in international forums like the OECD, or in regional ones like the European Parliament, it is a fairly limited circle:  banks and other financial institutions, academics, and representatives of national tax authorities.  Yes, there were also reps from human rights groups committed to tax justice, but did adding them to the group of well-dressed bankers and bureaucrats who flew in from different countries mean that all the stakeholders in such policy were represented?  Of course not.    Way down at the end of the line - far from the exalted forums where such policy was debated and decided - are human beings who must bear the brunt of any unintended consequences.

One of the most glaring omissions in the debates about international taxation and information exchange is the impact all this will have on global mobility.  And I'm not talking here about the global rich - I am talking about migrants whether they are engineers, teachers or musicians or those who drive taxis or work in restaurants.   These are the people who have to sign the forms that come from the local or home country banks or who see their access to financial services (like basic bank accounts) limited or denied.  In the worst case these migrants could end up caught between the taxation systems of the host country where they live and work and that of the home country which has different and sometimes conflicting requirements.

I think we will see more of this as financial information begins to flow between countries of immigration and emigration.  The taxation of French living abroad has been proposed and will surely be proposed again as the French state looks for more sources of revenue.  Developing countries surely have an interest in doing this as well - a migrant from such a country may not be particularly well-paid according to the standards of his host country but what he earns may represent a great deal of money to people back in his home country. Should such people be taxed by their home countries? Should an immigrant taxi driver in New York be required to contribute something to his home country above and beyond what  voluntary remittances he may already be sending back?  Should a visiting university professor in Europe be required to pay some portion of his income back to his country of citizenship?

These are serious questions that are at the intersection of international migration and international tax/information exchange policy.  On one side are millions of people on the move, the vast majority who are not rich.  On the other are high-level regional and international forums where migrants have no voice and where policy is made pretty much by stealth.

The ability to leave one's home country is enshrined in international human rights law. If global mobility is made more difficult (or even impossible for some) because of conflicts between home and host country tax policies, or where tax policies might be used to discourage people from emigrating, are these not human rights issues?

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