Members of the Asian Peoples’ Movement on Debt and Development in India are set to launch campaigns to call for increased government subsidies for health care, press for a portion of taxes to be used for the welfare of women and children, and demand fewer taxes on fishing gear. They will also launch a social media campaign against the rise in fuel prices and LPG.
These tax and fiscal justice campaign plans were discussed on March 30, 2022, in a country consultation on tax and fiscal justice in New Delhi, India organized by the Asian Peoples’ Movement on Debt and Development. Representatives of APMDD member organizations participated, including 30 leaders coming from the National Hawker Federation, Indian Social Action Forum, All India Women Hawker Federation, Samata, Mines Minerals & People, and Environics Trust. There were also some attending online.
APMDD members and resource persons from the Centre for Budget and Governance Accountability (CBGA) tackled global, regional, and national tax policy developments and other related issues that impact inequalities. Participants also planned out key steps in advancing a national campaign for tax and fiscal justice.
Jeannie Manipon, APMDD’s Development Finance (DevFin) Program Manager, outlined critical regional and global trends in the tax policy landscape. She noted that even in the pre-pandemic situation, governments had been relying on indirect taxes such as VAT and GST in many countries in the region, including India, and on other regressive tax policies. This undermines the redistributive function of taxation, thus, public services end up being funded by the same people that were meant to benefit from them, according to research.
This flawed tax system and the long-standing inequalities both on the domestic and global fronts were revealed and exacerbated by the pandemic, feeding what Manipon referred to as, “the virus of inequalities within and among countries.” During the pandemic, big companies and wealthy individuals benefited from generous tax incentives from governments under the guise of economic recovery, even as they continued tax avoidance and evasion practices, and exploited loopholes in tax systems.
To counter this flawed global tax system, civil society organizations have pushed for progressive taxation and called for a UN Tax Convention, Manipon said. She stressed the need for civil society to muster its collective voice calling on governments to not sign away taxing rights under unfair tax deals, peddled by G7 and the OECD countries.
Manipon said civil society groups should seize global advocacy moments such as the G20 summit taking place in Indonesia in November this year, and in India next year, to advance the call for tax justice.
Looking at the Context in India: Key Issues in Tax and Fiscal Policy
Sarah Farooqui, CBGA Senior Policy Analyst, said that India has one of the lowest tax-to-GDP ratios in the world which is expected to decline next year. She said that the higher the tax-to-GDP ratio, the greater the fiscal space the country has to finance various public services.
“Historically, India has always been more dependent on indirect taxes,” she said. “During the pandemic, this trend has worsened.”
She said that the Indian government already imposes high taxes on fuels such as diesel and petrol, which ordinary citizens use on a daily basis.
Government policies reducing corporate tax rate in 2019, and increasing excise duty in 2020 have led to a decline in the total share of direct taxes to total revenues from 54.6% in 2019 to 46.6% in 2021.
Farooqui said regressive tax policies worsen gender inequalities as women tend to spend more on household items, the cost of which includes consumption taxes. “As the costs of living rise, the socio-economic conditions within patriarchal structures hit women even harder, as they have to choose unpaid care work over education, formal employment, and access to healthcare,” she said.
A People’s Manifesto: Tax the Rich, Not the Poor; Make Taxes Work for People and The Planet
Rey Abella, also from the DevFin program, gave an overview of APMDD’s tax and fiscal justice campaigns and the “Seven Demands” outlined in A People’s Manifesto: Tax the Rich, Not the Poor, Make Taxes Work for people and the Planet1. He said the People’s Assembly for Tax Justice held in October 2021 led to the consolidation of a comprehensive regional campaign agenda aimed at responding to emerging challenges.
“We really felt the effects of inadequate funding of public services,” he said. It was also around this time that the OECD was pushing for their “tax deal of the rich,” lowering minimum corporate tax rates to 15%, among others. “This would result in decreased revenues for developing countries,” he said.
The OECD tax deal, undemocratically decided by the world’s richest countries, proposes a “two-pillar solution.” One pillar provides a tax arrangement benefitting only the Global North. It proposes for corporations to be taxed only in countries where sales and consumption are made and not in countries, such as India, where goods are produced through the extraction of natural resources and exploitation of cheap labor. The second pillar aims to lower the minimum global corporate tax rate down to 15%.
Key issues which surfaced in roundtable discussions that followed included the massive rise in fuel taxes over the last two years. The high fuel costs inevitably impacted the price of essential commodities burdening low and middle-income Indian households with a steady increase in their daily costs.
Adding to this are the impacts of the Goods & Services Tax system. Micro and small businesses are forced to spend additional money and effort to meet the additional paperwork and bureaucracy required by the GST system.
Essential fishing gear is now taxed under the GST system, affecting the livelihood of fish workers. Under the earlier tax regime, fishing gear was exempt from tax.
On top of this, the GST Council, the body that decides tax slabs, lacked transparency and proper representation of marginalized people in the country.
APMDD members also spoke about the controversial Metro construction in the city of Kochi. People in the entire state of Kerala are being taxed for the Metro despite the project only serving a small population, particularly in the city of Kerala.