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TAX JUSTICE

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CIVIL SOCIETY ORGANIZATIONS DECRY "FALSE PROMISES" OF DOF FOR TRANSPARENCY IN THE EXTRACTIVES SECTOR
Groups to press for government monitoring of mining companies

Leaders of mining affected communities and civil society groups decried Friday a government official’s statement that the Philippines can ensure transparency in the extractives sector following the country’s withdrawal from the Extractive Industries Transparency Initiative (EITI), a platform for monitoring mining companies’ performance.

In a meeting to discuss strategies to press for transparency and accountability in the extractives sector the civil society organization (CSO) leaders said the government should halt its “subservience to corporate interests in the mining industry.”

Finance Secretary Carlos Dominguez had earlier downplayed the withdrawal saying that the Philippine government  will “continue to champion better resource and revenue management” in place of the global multi-stakeholder mechanisms of the EITI.

However, CSO leaders were doubtful of the Philippine government’s commitment to champion peoples’ interests vis-a-vis the mining industry, citing the abundant privileges and incentives granted by the government to the sector despite its long history of questionable practices, including environmental degradation, tax and labor abuses.

“It is appalling that the Philippine government refuses to be transparent in policies and in its involvement in the extractive sector, ,” said Lidy Nacpil, Coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD. “The extractive industries have proven to be harmful and destructive to the environment and have significantly contributed to the climate crisis.”

Nacpil also said the sector is “a hotbed of illicit financial flows that result in foregone revenues and drain our economies of financial and other resources that should have instead been used for peoples’ needs.”

The Philippine government should prioritize peoples’ needs in the face of multiple crises and  put an end to tax and human rights abuses of corporations in the extractives sector, she said.

Dr. Benito Molino, Chairperson of Zambales Lingap Kalikasan (ZALIKA) denounced the latest move of the Department of Finance (DOF) to abscond a platform involving government, mining corporations, and civil society that requires its members to publish financial information according to a standard.

“Withdrawing from the EITI only further shows that this government is a willing puppet of extractive industries, especially mining,” Dr. Molino said. “As the Philippine government plays the role of eager servant to mining corporations, we foresee intensified extraction of natural resources and continuing impunity for corporations’ tax, labor, and other abuses. This will aggravate the destruction of areas for food production and will worsen our current food and environmental crises.”

Dr. Molino is a veteran of a long battle mounted by communities in Sta. Cruz Zambales, calling on the Philippine government to sanction mining corporations for the irreversible degradation of agricultural lands and fisheries in the area.

In 2017, four of these mining corporations were ordered to close as a result of the government's investigation of their violations of environmental laws. However, these orders were overturned in 2019.

The companies investigated by the Department of Environment and Natural Resources were BenguetCorp Nickel Mines Inc., Zambales Diversified Metals Corporation, LNL Archipelago Minerals Incorporated, Eramen Minerals Inc.

More recently, the lifting of Executive Order 79 imposing a moratorium on the approval of new licenses for mining corporations “guaranteed a new lease on life for mining corporations in Zambales,” Dr Molino said.

Dominguez’s pronouncement to champion transparency in the extractives sector offers nothing more than “false promises,” according to Fara Diva Gamalo, Coordinator of women’s organization Oriang in Eastern Visayas. “Public officials like Dominguez who have vested interests in protecting profits of mining corporations hold no moral high ground to institute policies strengthening accountability in the extractives sector,” Gamalo stated.

“For as long as the DOF is hostage to corporate interests in the extractives sector, the demands of local communities to exact accountability from mining corporations will remain unheeded,” Gamalo said.

At the forefront of the anti-mining struggles in Eastern Visayas, Gamalo has stood witness to the widespread impunity in human rights violations committed against leaders of local communities who demand simply for the government to protect their homes and livelihoods by prohibiting the destructive operation of mining corporations.

Meanwhile, in a message sent to Philippine-based CSOs, Financial Transparency Coalition (FTC) Executive Director Matti Kohonen said the Philippine government’s recent withdrawal from the EITI  is “a serious step back for transparency in the extractive sector, including financial transparency on ownership and taxes paid in the sector.”

The FTC is a global network of organizations working to help curb illicit financial flows with members in Europe, Africa, Latin America and the Caribbean, Asia, and North America.

Kohonen emphasized the need to  maintain  public registries of beneficial owners in extractive companies, and to regularly update and expand it to include fisheries and forestry.

A public beneficial ownership (BO) registry provides access to  information on companies’ beneficial owners, the individuals who ultimately own, control or benefit from the companies’ profits. CSO leaders said that such registries can be important tools in fighting tax abuse and corruption and can aid in  recovering foregone revenues from profits of mining corporations stored in offshore accounts.

The CSO leaders cited the 2021 State of Tax Justice Report saying untaxed wealth is but a fraction of the PhP 26 trillion lost to tax abuses globally of wealthy individuals and corporations. Aggressive and systematic tax avoidance practiced by extractive companies through transfer pricing and trade misinvoicing result in massive tax losses for the Philippines, they pointed out. 

They said government inaction to address these issues prompted the tax justice movement to mount protests at the DOF in November last year, demanding public investigations into the tax and labor abuses of mining corporations exposed in the Pandora Papers. The prevalence of profit-shifting and tax avoidance in the extractives sector, whose profits prosper amidst financial secrecy, also points to the weakness of global standards of financial transparency and lack of public access to beneficial ownership information. 

The longstanding demands by civil society for transparency and accountability are foregrounded by a history of unjust practices, including tax abuses and massive illicit financial flows (IFFs) in the Philippine extractives sector. These IFFs are jointly enabled by a domestic fiscal regime that encourages tax avoidance through decades-long tax incentives to mining corporations and a global tax architecture that continues to permit profit-shifting to low-tax jurisdictions. The Pandora Papers expose in 2021 implicated political and business elites across the world, including Philippines, in shady but systematic practices to hide wealth in offshore accounts to avoid paying taxes.

“It is imperative to transform global and domestic tax rules, to effectively curb IFFs and end the privileged status enjoyed by mining companies because of the   generous tax and other fiscal incentives granted by many governments in Asia, including the Philippines,” Nacpil said.  “Tax abuses by corporations and wealthy individuals and other types of IFFs  significantly drain tax revenues and public resources urgently needed to fund public services.”

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WE ARE WORKERS TOO! Recognizing unpaid care workers through tax and fiscal justice

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Download the PDF Version: pdfWE ARE WORKERS TOO! Recognizing unpaid care workers through tax and fiscal justice

Governments’ reliance on indirect taxes to raise revenues adds more burden to low-income families, instead of economic relief. Value-added Tax (VAT), Goods and Services Tax (GST), and excise taxes on fuel are especially burdensome for women who generally earn less than men and who take on a bigger share of care and domestic work. Given this, plus the impacts of austerity measures prescribed by international financial institutions and decades-long privatization of essential services, women's struggles for survival and economic and gender justice have become even more acute. As women’s labor is exploited in homes and factories, the vast majority of women across the world continue to be time-poor, earn less than men, and have the least access to productive and other resources needed for social and economic resilience in times of crisis.

 

Millions of women across the world take on the bigger share of care work for families and households, a great deal of which are unpaid labor, and spend more of their income on basic household goods. The situation of women and other care workers who have no income of their own is often worse. Having to pay consumption tax for basic necessities worsens the already appalling situation of unpaid care workers, especially those who care for families that are barely surviving.

 

On top of the daily grind of taking care of the sick and elderly, cooking, cleaning, teaching children, and making do with deficient social services, the majority of women still have to find ways to earn to increase the income of their households. Surviving on a single income is almost impossible for many families and households. Many women have had to take on odd jobs (laundry, piece work, etc) or find informal work even in the formal sector.

 

While many women would prefer to seek formal employment, they are constrained by care duties at home and the lack of state provisions for child care and other physical and social infrastructures needed to enable them to work ‘outside the home’ without sacrificing care responsibilities. The 2017 ILO-Gallup report points out that, globally, a majority of women, including those who are not in the workforce, would prefer to work paid jobs. However, they were constrained by the challenges of work-family balance and lack of affordable care such as daycare centers for children.

 

Social norms, gender stereotypes, and macroeconomic policies that undervalue care work as “women’s work” or serve to confine women to unpaid domestic work and limit their social and economic mobility serve as barriers to women’s full enjoyment of their rights: right to education, decent work, right to access public spaces and be represented in decision-making, and many others. These discriminate against women, perpetuate gender pay gaps, exacerbate the “feminization” of poverty, and continue to disempower millions of women across the world.


 “Women’s work” by the numbers 

An International Labor Organization (ILO) report issued in June 2018 states that gender stereotypes and biases toward care work are still influential even as attitudes towards the gender division of paid and unpaid care work are changing. 

The ‘male breadwinner’ family model along with women’s traditional caring role remains deeply ingrained within societies. The report says, globally, women perform 76.2 percent of total hours of unpaid care work, more than three times as much as men.  In Asia and the Pacific, this rises to 80 percent with men performing the lowest share of unpaid care work of all regions (1 hour and 4 minutes). In Pakistan,  men devote a mere 28 minutes or 8.0 percent of their total working time. In India, men do only 31 minutes (7.9 percent) of unpaid care work. 

According to the ILO report, with data on two-thirds of the world’s working age population, 16.4 billion hours per day are spent in unpaid care work - the equivalent to 2 billion people working eight hours per day with no remuneration. Were such services to be valued on the basis of an hourly minimum wage, they would amount to 9 percent of global GDP or US$11 trillion (purchasing power parity in 2011).

Reference: Care Work And Care Jobs

https://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/---publ/documents/publication/wcms_633166.pdf


The undervaluation of care and care work, is reflected in the gross imbalances and gaps in national budgets and lack of publicly funded care services, support systems for care workers, and physical and social infrastructures needed to reduce and redistribute care work. Care – caring for families, communities, and society as a whole – is an essential need and function of any society; it is not “just a woman’s responsibility,”  but the collective responsibility of society.

 

The Asian Peoples’ Movement on Debt and Development (APMDD) advances a comprehensive agenda for tax and gender justice that takes into account the multiple and intersecting layers of discrimination that women in Asia face and particularly notes the following1:

  • “The invisible and unpaid care work of women; the multiple responsibilities of housework; and economic activity for income -- Women assume a hugely disproportionate share of care labor or social reproduction. Taking care of the household, the children, the elderly, and the sick are still mainly seen as ‘women’s work’ – which are not valued (not seen as work) or undervalued (not seen as equally important to other work) and largely unpaid. The invisibility of women’s work is also an issue in economic production, where some of the work that women do are not recognized as part of the production process. It has been said that women perform more than two-thirds of the world’s work, produce almost half of the world’s food, yet only receive a small fraction of the income they would have otherwise earned, and only own one percent of property.

“Care labor and more specifically social reproductive work are not only largely unrecognized and uncompensated, but it also continues to be exploited under capitalism and made to feed into global trade and production chains in the current context of neoliberal globalization. It is also assumed that such care work rendered by women will take on the burdens resulting from the steady decline in public subsidies, or when essential social services are privatized.”

“We challenge such measures as the household and GDP, that do not take into account micro to macro inequalities in power and entitlements and fail to recognize the significant contributions of women’s unpaid work throughout human history.”

 

  • “Women’s status and treatment within the family and within the context of marriage -- Despite playing a central role in caring for the family, women have secondary and/or subordinated status in the family with less power and privileges. Issues under this include women’s subjugation in the household decision-making process, the prevalence of domestic violence, prioritization of children’s and male partners’ health and nutrition over women’s, unjust household practices such as the dowry system, child/forced marriages, domestic violence, male-privileging inheritance and property rights, and discrimination over single and female-headed households, the problematic assumption that heads of households are always male.”

 

The road to equality for women requires a change of course, most especially to assert the cause and rights of the most vulnerable women which includes unpaid care workers.

 

Fiscal and tax systems should thus be transformed to ‘make taxes work for women,’ revalue care and render what is due to unpaid care workers; truly serve the interests of people and  the planet, and work for the building of just and equitable societies. Toward these ends, we advance the following calls and demands:

 

1. REDUCE UNJUST TAX BURDENS ON WOMEN; TAX THE RICH, NOT THE POOR

Regressive taxes like VAT and GST disproportionately burden women who make up the majority of the poor and who spend more on household necessities like food and utilities. The system of raising revenues by relying on indirect taxes only worsens the situation of unpaid care workers who do not earn any income to spend and who are part of or work with families who do not have much to spare as well. Unpaid care workers and women doing domestic work who have no regular income of their own but who have to care for families are hard pressed to manage with the additional VAT or GST on top of the prices of consumption goods.

 

But governments usually spare high-net-worth individuals and hard-to-tax groups, taxing regressively, while offering generous tax incentives to corporations. They focus on collecting sales and consumption taxes such as VAT, GST, and excise taxes that do not account for vast income disparities between the rich few and the poor majority. Meanwhile, tax avoidance and evasion by elite individuals and corporations remain unchecked and have led to the loss of potential tax revenues. (See article The Pandora Papers Exposé: Hoarding wealth amidst global hunger and uncertainties.)

 

VAT and GST are major sources of revenue in countries in Asia. But VAT, GST, and excise taxes on fuel weigh heavily on low-income households. In March, APMDD-India members agreed to campaign against the rise in fuel prices and LPG (Domestic Cooking Gas) prices. “Price increases in essential commodities impact women more than men as they are the ones who manage household expenses. A campaign to understand the issue is necessary," said one of the organizers of the consultation.

 

Unfortunately, some governments in the region are looking to increase regressive taxes further. Pakistan is likely to increase the sales tax rate to 18 percent from 17 percent in the federal budget 2022-2023. Sales taxes are, similar to VAT, regressive as a uniform amount is paid regardless of income.

 

In the Philippines, the Department of Finance is also proposing the expansion of the VAT  base and the repeal of exemptions to the incoming new government. The standard VAT rate of  12 percent of the gross selling price or gross value currently applies to most supplies of goods, properties, and services. Changes to the VAT regulations were made in 2021 under the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act. The law introduced a lower corporate tax and increased the excise taxes on fuel, automobiles, tobacco, and sugar-sweetened beverages with corresponding impacts on the prices of other goods and services consumed by Filipinos.

 

Indonesia already increased the VAT rate from 10 percent to 11 percent, effective 1 April 2022. Basic goods and services (rice, meat, public transport, etc.) will continue to be exempted.

 

Instead of increasing the tax burdens of ordinary people, governments should instead work toward progressive taxation that has the potential to earn much bigger tax revenues.

 

2. REDUCE AND REDISTRIBUTE UNPAID CARE WORK; INCREASE ALLOCATION OF TAX REVENUES FOR PUBLIC SERVICES

The dismal state of public services, revealed so poignantly during the height of the pandemic, is the outcome of decades-long privatization of essential services, including health care, underfunding of public services and other ‘belt-tightening’ measures prescribed by the IMF-WB on developing countries. Debt servicing and military spending also ate up chunks of national budgets in the region. Systematic tax avoidance by corporations and the elite, and other forms of illicit financial flows led to foregone revenues and drained economies of precious resources much needed for public services.

 

But massive resources are needed for governments to decisively address the collective plight of unpaid care workers and fulfill the commitment to reduce and redistribute care work.

 

Tax revenues should be allocated to priority and essential public services that fulfill basic needs and rights, and serve to reduce and redistribute care work, such as the following: 

*Primary health care facilities, including quality and gender-responsive reproductive health care;

*Day care facilities and other social infrastructures that truly address women and children’s needs; 

*Assisted living facilities for the elderly and persons with disability, and public spaces and buildings with assistive technology; 

*Safe, women-friendly and accessible public spaces, especially markets, footbridges roads, and WASH (water, sanitation, and hygiene) facilities, sources of clean and safe water; and  

*Lean, accessible and affordable, and safe energy for household needs.

3. RECOGNIZE, REPRESENT AND REWARD UNPAID CARE WORKERS

Barriers to care workers' social life, violations of their human rights, and their economic insecurity and poverty must be addressed as a matter of justice. Unpaid care workers, because they are not recognized as ‘workers’, do not enjoy basic workers’ rights including decent and fair wages, organization and joining of unions, economic initiative, social security, and retirement. Their workplaces – the ‘homes’ – are often deemed as ‘private spaces’ that are not supported or monitored for health and safety. They receive no assistance for sudden changes in work conditions, unlike other workers who have the right to assistance from loss of employment or receive some relief in emergencies like during the COVID-19 work slowdowns and closures.

 

Governments and societies must ensure their enjoyment of basic workers’ rights and other rights, including economic security, rest and leisure, equal access to public service, and participation in the cultural life of the community. Governments should ensure social protection, especially health and social security; ensure access to quality and gender-responsive continuing education and lifelong learning; and, reward unpaid care work through tax credits, VAT/ GST exemptions, and/or other financial instruments.

 

Tax systems should be rights-based and tax policies can be made to ensure that tax revenues are raised and spent in ways that promote human rights and gender equality. Governments must step up to adequately finance gender-responsive social services that promote women’s rights and reduce inequalities, including through gender-responsive budgeting.

 

4. STRENGTHEN WOMEN’S VOICE AND PARTICIPATION IN DECISION-MAKING, INCLUDING ON TAX AND FISCAL POLICIES AND OTHER SOCIAL AND ECONOMIC POLICIES THAT AFFECT WOMEN’S LIVES.

Women in unpaid care work and other fields and situations that hinder their economic autonomy and full exercise of their rights should be recognized and have the right to representation and participation in public life and decision-making. Spaces and resources must be allocated to support community-based women’s organizations and initiatives.

 

Governments have to work to realize their commitment to this agenda in the Beijing Declaration and Platform for Action, the most comprehensive agenda to date, on gender equality and women’s empowerment. The Platform for Action brought forward issues that impact women and girls and an understanding of women’s and girls’ rights and ushered in a new mindset that realizing the full potential of women and girls is a powerful and essential component of sustainable development. Among the issues identified to impact women and girls are poverty, violence against women, girls’ education, and equal participation of women in the labour market, especially in highly skilled jobs, STEM industries, and senior management. It is committed to promoting the balance of paid work and domestic responsibilities for women and men.

 

5. SYSTEM CHANGE: TOWARD JUST AND EQUITABLE SOCIETIES THAT VALUE CARE AND WORK FOR PEOPLE AND PLANET

Tax and gender justice require a radical rethinking of the value of care work and women in society. A transformative agenda for social and economic rebuilding that revalues care work and places people’s and the planet’s well-being at the center starts with a departure from the current capitalist and patriarchal system that feeds off the unpaid and underpaid labor of millions of women for the benefit of the elite few and corporate giants.

 

It is the sovereign right of people to reform their tax systems and institute policies away from the tax-related impositions of international financial institutions and toward people's needs and interests, and equality.

 

Unpaid care workers must be full participants in transforming the economy where care is valued as a public good and care workers can exercise their rights as workers and achieve economic autonomy and gender empowerment.


REFERENCES

​Addati, L., Cattaneo, U, Esquivel, V., Valarino, I. (2018) Care work and care jobs for the future of decent work (Report) International Labor Organization. 

https://www.ilo.org/global/publications/books/WCMS_633135/lang--en/index.htm

 

1 JSAPMDD Women and Gender Framework and Perspectives Paper (2019, Working Paper of the APMDD Women and Gender Working Group. (unpublished). .

​​Progress of the world’s women 2015–2016: Transforming economies, realizing rights (2015) UN Women.
https://www.unwomen.org/sites/default/files/Headquarters/Attachments/Sections/Library/Publications/2015/POWW-2015-2016-en.pdf

 

Statistical Yearbook for Asia and the Pacific 2016 (2017) United Nations Economic and Social Commission for Asia and the Pacific.  

https://www.unescap.org/publications/statistical-yearbook-asia-and-pacific-2016

 

Sciortino, R. (2021) Informal Workers in Southeast Asia: Resourceless, yet Resourceful https://www.wiego.org/blog/informal-workers-southeast-asia-resourceless-yet-resourceful


Revenue Statistics in Asia and the Pacific 2021: Emerging Challenges for the Asia-Pacific Region in the COVID-19 (2021) Organisation for Economic Co-operation and Development (OECD)-Centre for Tax Policy and Administration (CTP) and the OECD Development Centre (DEV). 
https://www.oecd-ilibrary.org/docserver/ed374457-en.pdf?expires=1656148681&id=id&accname=guest&checksum=6CBB721E4CB1D31E16225E34B6E75816


SPARSE RESPONSES IN THE TIME OF PANDEMIC 


COVID-19 has underscored unpaid care and domestic work as the burdens of care workers were multiplied with households keeping indoors because of the shift to online classes and work from home arrangements, and further extended in households when household members are infected with COVID 19 and, at the height of infections, hard pressed to access health care because of the overwhelming number of patients.  

The COVID-19 pandemic worsened the situation of women doing unpaid care work. According to Amnesty International (AI), before the pandemic, women and girls were provided 12.5 billion hours of free care work every day globally. A sharp disparity is visible in South Asia. Referring to an Oxfam report, AI says “women in India spend 10 times more time on care work than men – both in urban and rural settings. In Bangladesh, women spend nearly thrice the time men do.  This arrangement of ‘all work and no pay’ while fuelling economic growth, has deprived women and girls of time and resources for education, skill development, or gainful employment. Unpaid and underpaid care work, a driver of inequality, has always left women with precarious jobs, insecure incomes, and no social safety – marginalized to the informal economy.” (READ Oxfam paper Time to Care). 

But government actions have not been responsive to the situation. The most common responses have only been food or food stamp distribution, cash transfers, and discounted utility bills, among others.

According to the 2021 ESCAP report,  “unpaid care and domestic work in Asia and the Pacific in the context of the COVID-19 pandemic reveals that of the various socioeconomic policy response measures instituted to date, less than 30 percent are care sensitive and only 12 percent are gender differentiated.”  


The ESCAP report further noted that of care-sensitive and gender differentiated responses,  there seems to be more social protection and cash transfers aimed at women but with time limitations.  There seems to be much less emphasis on the gender dimensions of care infrastructure and provision of care services. “The few gender-responsive and care-sensitive measures that have been put in place have been short-lived or are at risk of being rolled back or undone once the crisis eases,” the ESCAP noted.


DISCLAIMER:

This issue brief has been produced with co-funding from the European Union. Its contents are the sole responsibility of APMDD and do not necessarily reflect  the view of the European Union.

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ADB's Asia Pacific Tax Hub a Trojan Horse

by Pooja Rangaprasad and Jeannie Manipon

April 6, 2022

Reprinted from Asia Times - https://asiatimes.com/2022/04/adbs-asia-pacific-tax-hub-a-trojan-horse/

The logo of the Asian Development Bank outside its headquarters in Manila. Photo: AFP / Ted Aljibe

The Asian Development Bank (ADB) launched the Asia Pacific Tax Hub on domestic resource mobilization and international tax cooperation in 2021. The stated objective under “international tax cooperation” is to promote tax initiatives of the Organization for Economic Cooperation and Development (OECD), a club of mostly high-income countries.

 

This explicit design and rationale of the Asia Pacific Tax Hub is extremely concerning considering the long history of criticism by developing countries, including in Asia, of OECD tax standards being biased and unfair.

 

Several Asian countries are not part of these OECD forums. For instance, the ADB notes that 26 of the 46 ADB developing members are not part of the OECD BEPS Inclusive Framework. (BEPS stands for “base erosion and profit shifting.”)

 

Asian civil-society organizations have criticized this ADB tax hub for being created without broad public consultation in the region and expressed concerns that it will reinforce the gross power imbalances in decision-making around global tax rules.

 

Rather than address the global constraints to domestic resource mobilization, the ADB tax hub will only reinforce the current problematic power dynamics in the international tax architecture dominated by OECD countries’ interests. It also raises important questions on how regional cooperation gets defined in Asia, and in whose interest.

 

Criticism of OECD tax standards

 

Developing countries have for years criticized OECD tax standards as biased and ineffective. During the recent negotiations of the OECD BEPS tax deal, the African Tax Administration Forum noted that Africa risked being “collateral damage” in the process.

 

Argentina’s finance minister has also complained that the BEPS deal is bad for developing countries, with their concerns largely ignored in the process and being forced to choose between “something bad and something worse.”

 

Pakistan, Sri Lanka, Nigeria and Kenya have already rejected this recent OECD tax deal. Pakistan’s finance minister said his country did not join the deal as it has “nothing for developing countries.”

 

Nigeria’s finance minister explained that many developing countries would experience reduced revenue collection by implementing the OECD deal.

 

A recent United Nations report noted that the 2021 tax deal of the OECD Inclusive Framework would only benefit a small number of developed countries and that developing countries stand to lose out.

 

Civil-society organizations globally are calling on developing countries to reject this tax deal and not sign on to any OECD multilateral, legally binding agreements that will implement these decisions.

 

Currently, it is only a political statement and not a binding agreement. The question arises as to why the ADB is promoting such OECD decisions, and in whose interest.

 

The Group of 77 and China (a grouping of more than 130 developing countries in the UN) have instead been calling for a universal, intergovernmental negotiation process at the United Nations to address the international tax system where all developing countries can participate on equal footing.

 

However, OECD countries continue to block that call in the United Nations and instead are now finding “regional” entry points to promote these decisions with developing countries.

 

Redefining ‘regional cooperation’

 

The recent G20 Finance Ministers and Central Bank Governors Meeting communiqué mandated the OECD to identify areas where domestic resource mobilization efforts can be supported in the Asia-Pacific region in collaboration with the ADB Asia Tax Hub as a “top priority.”

 

It is deeply problematic that bodies such as the Group of Twenty and OECD are dictating regional priorities despite having no mandate from Asia-Pacific countries that are not members of G20 and OECD to do so.

 

This is further compounded by the fact that membership of some of these Asia-Pacific bodies already includes non-regional members. Of the ADB’s 68 members, 19 are outside of Asia and the Pacific. Similarly, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) also includes members such as the US, the UK, France and the Netherlands.

 

For an issue as politically sensitive as taxation, the presence of non-regional members in such bodies risks undermining regional priorities, especially of developing countries in the region.

 

Indonesia as current G20 chair and India as the upcoming G20 chair should be upholding interests of developing countries in Asia instead of rubber-stamping the interests of OECD countries. Asian developing countries should reject this international tax cooperation agenda of the ADB tax hub, which is nothing more than a Trojan horse to promote biased OECD tax initiatives in the region.

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A PeoplesManifesto 21JAN22 1We, as members of civil society and mass organizations from different countries in Asia and other regions, come together in recognition of the urgency of transforming our tax and fiscal systems to make them ‘work for people and the planet.’ These have to be reoriented to turn away from blind subservience to corporate, profit-driven interests and towards the peoples’ agenda for economic justice and social transformation. At a critical time when tax revenues are gravely needed to fund essential public services and meet sustainable development targets, anti-poor tax policies and illicit financial flows have only deepened widespread inequalities within and among countries in the world

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Fighting for survival amidst multiple crises of health, joblessness, violence and exclusion has become the “new normal” for many communities and sectors in Asia, with 89 million more plunged into extreme poverty and an average unemployment rate of 20% across the region in 2020. The social toll of the COVID-19 pandemic continues to be heavy for many countries with over-capacitated health systems, lower school completion rates, increasing hunger and malnutrition resulting from inadequate government responses and weakened revenue generation.

 

The historical imperative to correct imbalances and fundamental flaws of tax and fiscal systems at the national and global levels is undeniable. We commit to strengthening our campaigns and collective struggles towards these demandsfor tax and fiscal justice:

 

  1. Tax the Rich, Not the Poor!

 

While the vast majority of peoples in Asia continue to struggle for health, safety, and decent work, a small minority wallow in unimaginable wealth. 41% of billionaires in the world can be found in Asia, with the highest share vis-a-vis other regions with 8% of high-net-worth individuals involved in the health and technology-related businesses. Their combined wealth is estimated at US$ 4.7 trillion. This staggering figure is vastly underestimated, as revealed by the Pandora Papers. The Pandora Papers extensively documented the blatant circumvention of national and global regulations by wealthy political and business elites in order to hide profits and assets in offshore jurisdictions with more lax regulations on corporate taxation.

 

We firmly believe that governments must proactively step in to ensure that the wealth of billionaires – socially generated through labor and natural resources of our countries – must not be allowed to accumulate without shared social benefits. That is only right and fair especially when the poor are forced to bear unjust tax burdens. 

 

We demand that governments take measures to adopt tax policies that will ensure that all incomes and profits of corporations and elites from both productive and financial activities are taxed. We call on governments to institute a progressive tax on wealth and accumulated assets of high net-worth individuals, and for countries around the world to establish cooperative mechanisms to strengthen the effective enforcement of wealth taxes by plugging loopholes that allow for illicit financial flows of untaxed wealth.

 

  1. Make Taxes Work for Women and Other Marginalized Sectors

 

Across Asia, tax and fiscal systems are riddled with gender biases and discriminatory policies that deepen inequalities and reinforce economic and social exclusion. Taxation can be instruments for advancinggenderand economic justice only when these biases are firstaddressed.

 

Women face multiple and intersecting forms of discrimination, take on a disproportionate share of paid and unpaid care work, face heightened exposures to violence, and have to contend with unjust tax burdens.

 

Women’s share of unpaid care work went up as much as ten times more than men during the pandemic lockdowns when state responsibilities for children’s education and family health fell on women’s shoulders. Women’s vast contributions to economic activity through social reproduction are rendered invisible by governments and economic systems that narrowly focus on production. Women’s unpaid care work must be proactively recognized and redistributed by the state by strengthening public services and rewarded through the provision of tax credits and other support systemsfor women.

 

Despite spending a greater share of incomes on household necessities such as food, childcare, and privatized utilities, tax burdens disproportionately fall on women, especially those from poor and marginalized sectors. Tax systems that heavily rely on regressive taxes on consumptionsuch as Value Added Tax (VAT), Goods and Services Tax (GST), and excise taxes on fuel and other household necessities – rather than taxing wealth and income-- are regressive and unjustly burdensome for women and other marginalized sectors

 

Communities of indigenous and tribal peoples in many parts of Asia are often sites of corporations’ wealth extraction from their land and natural resources. Since many essential goods and services are out of reach in rural areas, regressive excise taxes on fuel and mineral products create additional barriers for access to transportation, cooking, and housing for these communities.

 

Workers from indigenous and tribal peoples in Asia are also 25% more likely to be employed in the informal sector, while those formally employed earn 18.5% less than non-indigenous workers. On top of landlessness and limited access to public services, workers from these marginalized backgrounds are forced to pay the same level of income taxes, contributing to higher rates of intergenerational poverty.

 

We believe that gender biases and other discriminatory policies in tax and fiscal systems must first be removed or corrected before taxation could be considered as a tool for advancing gender justice and reducing inequalities. 

 

  1. Reclaim public services; increase and mobilize public funds for fulfilling peoples’ rights and needs!

 

 

COVID-19 has painfully shown us what it means when public health systems are underfunded and when health care and essential services remain out of reach for the vast majority of peoples.For many decades, governments have accelerated the privatization and financialization of public services in compliance with structural adjustment programs and the neoliberal paradigm of free markets imposed and peddled by international financial institutions like the IMF, WB, and the ADB. Struggles of many poor countries to meet greater public demands in this critical time underscore the failure of privatized corporations in health, energy, water, education, and telecommunications to provide comprehensive, quality, affordable, and accessible services. Profit-driven service provision has also led to massive vaccine inequality, leaving many poor countries in Asia behind despite their vulnerability to risks and social impacts of local mass transmissions.

 

 

Today, public services are further undermined by austerity measures, inadequate government spending from weak domestic resource mobilization, and false solutions offered by public-private partnerships. The massive tax abuses of wealthy individuals and corporations that have remained unchecked have also gravely eroded governments’ abilities to generate revenues for funding public services. 

 

We must press upon governments to reclaim public control of essential social services, generate more public revenues and increase allocation of funds for public services, and rechannel funds away from debt servicing and militarization towards the provision of public services to ensure that people’s rights and needs are met. 

 

  1. Make MNCs Pay Their Share! Stop Corporate Tax Abuses and Other Illicit Financial Flows!

 

The Pandora Papers estimate that profits of corporations and wealth of elites held in offshore accounts may be as massive as one-third of global GDP. Legal instruments of tax havens have prevented these illicit financial flows from being subjected to public scrutiny or taxation in developing countries where wealth is generated, and where corporate tax abuses significantly erode public revenues. We must strengthen financial transparency and accountability mechanisms, ensure the full disclosure of beneficial ownership, and strengthen civil society-led initiatives to hold governments enabling IFFs to account.

 

Tax competition in the region has heightened with governments’ economic “recovery” programs, as seen in recent initiatives to lower corporate tax rates and maintain liberal tax incentive regimes. These have opened several loopholes for corporate tax abuses by multinational corporations (MNCs) through trade mis-invoicing, profit-shifting to lower-tax jurisdictions, and taking advantage of overlapping fiscal regimes and tax treaties. To compel MNCs topay their just share, we must end tax competition in the region and globally by instituting a global minimum corporate tax rate of 25-30%, closer to the recommendation of the United Nations High-Level Panel on Financial Accountability, Transparency, and Integrity (UN FACTI), and will be beneficial to developing countries. We must also call on governments to conduct an audit of all tax treaties and incentives to ensure that all agreements are aligned with domestic resource mobilization targets to fund peoples’ urgent needs.

 

  1. Advance Tax Justice in the Extractive Industry!

 

The social, economic, and environmental impacts of the extractive industry have long been the focus of many community struggles and campaigns of people’s movements and civil society organizations. On top of the irreversible damages to the environment and in many cases to people’s health, the mining industry is also rife with corruption, tax abuses and other types of illicit financial flows.

 

Economic restrictions imposed by governments since 2020 have been utilized as smokescreens by mining corporations to expedite the approval of projects despite peoples’ resistance. Corporations in the extractives sector have historically benefitted from privileges of long-standing tax holidays and preferential fiscal regimes applicable to mineral resource extraction. Tax planning and avoidance of corporations, especially MNCs  in extractive industries, result in massive erosion of public revenues and intense profiteering at huge costs to people, communities, workers, the economies and environment of Asian countries.

 

We must urgently institute and enforce tighter social, financial and environmental regulations and sanctions over the extractives sector; scrap tax incentives granted to extractives industries and curb illicit financial flows; impose resource taxes on the export of raw materials from mining and other extractivist activities; and uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.

 

  1. End Inequalities in global tax rules and rule-making! UN Tax Body Now!

 

Through the OECD-G7-G20 “tax deal of the rich,” the world’s richest countries and biggest economies are seeking to bind our tax systems in a more vicious race to the minimum as they benefit in a much greater degree from the proposed distribution of taxing rights and the meager global minimum tax rate of 15%. Digital services taxes (DSTs) proposed in the ‘tax deal of the rich’ also pose a risk of reproducing the regressive impacts of VAT in our countries as the costs will certainly be passed onto consumers. As peoples of developing countries that have long been impaired by the fiscal stranglehold of underfunded public services and regressive taxes, it is imperative for us to strongly reject these false solutions and urge our governments to take leadership in forwarding a just, progressive, and democratic alternative.

 

To meet peoples’ urgent needs, we need fiscal systems and global tax rules that serve to reduce the entrenched inequities and injustices of tax norms and rule-making on the national and global levels. Negotiations and decision-making on global tax rules must be done within the auspices of the United Nations, in a platform where all countries sit as equals and voices of civil society can hold governments to account. We reiterate our call for the establishment of an inter-governmental mechanism on tax matters – a UN Tax Body -- that is genuinely inclusive, democratic, transparent and accountable, where all countries sit at the table as equals and where the voices of the peoples of the Global South and of marginalised sectors, those who are most affected by inequalities in global tax rules, are heard. 

 

  1. System Change, People First Before Profit!

 

We strongly believe that rebuilding broken tax and fiscal systems is an urgent task, but it cannot be achieved only through minor fixes and band-aid solutions such as those proposed in the “tax deal of the rich” and by international financial institutions like the International Monetary Fund (IMF) and the Asian Development Bank’s Asia-Pacific Tax Hub. Tax and fiscal justice can only be achieved by addressing fundamental flaws in tax and fiscal systems. 

 

Our campaigns for tax and fiscal justice is grounded on a vision for economic justice and must serve a bigger fight for system change – for thoroughgoing changes and transformation of economic systems, of gender and class relations, as well as a fundamental restructuring of the relationship between production and the environment.

 

Our struggle for tax justice must also be integrated with a systemic shift away from extractivism – the 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).

 

Our vision for economic justice is founded on a fundamental reorientation towards prioritizing peoples’ needs and a rejection of neoliberalism and unbridled capitalism, reclaiming the central role of governments and civil society in regulating market and social relations.

 

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The call for governments to “Tax the rich, not the poor / Tax the billionaire, not the worker” reverberated in protest actions and activities staged by people’s organizations and movements in Asia on 21 January 2022, in solidarity with theGlobal Protest to Fight Inequality called by the Fight Inequality Alliance and with movements and CSOs in over 30 countries.

Protest actions in the region, including in Bangladesh, India, Indonesia, Pakistan and the Philippines,called attention to the urgency of reforming tax systems to end unjust tax burdens on the people and to sharply and justly tax the income and wealth of corporations and the elite in order to raise domestic revenues for public services and for people’s recovery.  

Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development,notes that the multiple crises in Asia —health crisis, political repression, the impact of the climate emergency, and the economic crisis -- preexisted the pandemic but the pandemic has exacerbated the situation, exposing and widening social and economic inequalities.

Prior to the outbreak of the pandemic, an estimated 233 million people in Asia and the Pacific lived in extreme poverty, below the international poverty line of $1.90 a day. Another 1 billion people were trapped on incomes of less than $3.20 a day, the lower middle-income poverty line. Close to 2 billion lived on less than $5.50 per day. UN ESCAP estimates that up to 93 million additional people may have fallen below the $3.20 per day poverty line due to the impacts of the COVID-19 pandemic.

Meanwhile, billionaires thrive in the region. A recent report has found the wealth of the Asian billionaire class to be greater than the GDPs of Indonesia, Malaysia, Myanmar, Philippines and Thailand combined.

Nacpil decried the role of tax systems in many countries in Asia and other parts of the world in entrenching inequality.  “We have national tax systems and an international tax architecture that put  undue burdens on people -- on women, workers, farmers, fisherfolk, indigenous people, urban and rural poor, even young people. These burdens come in the form of a very regressive tax system. These tax systems put the greater weight of tax payments on poor and marginalized sectors and communities while the elites and biggest multinational corporations are given all kinds of tax breaks and commit tax evasion with impunity,” she said.

Massive profit shifting by MNCs and tax avoidance and evasion by the elite, Nacpil said, results in staggering amounts of revenue losses for public coffers, a major factor driving the underfunding of public services.   The social, economic and environmental costs of these tax abuses by MNCs and the elite are borne by the vast majority of ordinary people, she added.

“A system where the unbridled accumulation of wealth and profit by a select few is enabledat the expense of the needs and rights of the many, is gravely and fundamentally unjust,” pronounced Nacpil.

According to a report published on January 19 by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam, and Patriotic Millionaires, a tax based on the market value of assets owned by multi-millionaires and billionaires could also “generate enough revenue to make enough vaccines for the entire world and fill financing gaps in climate measures, universal health and social protection, and efforts to combat gender-based violence in over 80 countries.”

The report also points out that an annual wealth tax in Asia would raise US$673.74 billion a year (with rates at 2% on wealth over $5 million, 3% on wealth over $50 million and 5% on wealth over $1 billion).Such a wealth tax applied to the wealth of multi-millionaires and billionaires would raise $673.74 billion a year, enough to increase public health expenditure in the region by 62%. 


Actions to #FightInequaity


Pakistan street rally 2 WhatsApp Image 2022 01 21 at 19.46.00 1In Pakistan, protest actions, children’s art exhibit and debate competition and other activities were held, led by FIA, Pakistan KissanRabita Committee (PKRC), and Crofter Foundation,  in 10 cities: Lahore, Karachi, Larkana, Faisalabad, Toba Tek Singh, Rawalpindi, Shadadkot, Mardan, Multan,and, Dera Ismail Khan.

(LINK BANGLADESH statement)


“Nearly half of the population live below or around the poverty level, not earning enough to make ends meet. Millions of workers in construction, retail, wholesale, transport, agriculture and informal sectors earn much lower than required to pay income tax. Nearly 77 percent of women are not active in the formal economy. Even then they are paying the imposed indirect taxes. How can they be asked to pay taxes when they find it difficult to feed themselves?” said Saima Zia of PKRC.


In the Philippines, coordinated actions were staged in 10 cities and municipalities in the major islands of Luzon, Visayas, and Mindanao. The actions denounced the botched response of the Philippine government to the multiple crises in health, livelihoods, climate, and human rights. Speakers and participants demanded an end to unjust tax burdens on people, pointing out that tax revenues should be used for people’s needs. They also called for the adoption of a wealth tax and recovery of ill-gotten weath of billionaires to raise more revenues to fund public services.


With the theme “Indak, Sayaw, Piglas Para sa Ayuda, Proteksyon, Trabaho – Kahirapan, Wakasan! Kayamanan, Buwisan!” (Move-Dance-Struggle for Relief, Protection, Work/ End Poverty, Tax Wealth!), protesters conveyed their demands through music, dance, testimonies and speeches from some of the most affected and marginalized sectors. Addressing the tax abuses of corporations and billionaires, they sang out a sharp warning, “We will tax YOU!”  The outdoor action in Quezon City gathered more than 300 participants and was led by the Freedom from Debt Coalition, Sanlakas, Bukluran ng Manggagawng Pilipino (BMP), the women’s group Oriang, Aniban ng mga Manggagawa sa Agrikultura, Kongreso ng Pagkakaisa ng Maralitang Lunsod with APMDD.

(LINK)


In Bangladesh, a human chain demonstration demanding tax justice was staged in front of the National Press Club. Badrul Alam, president of Bangladesh Krishok Federation, said that due to lack of proper tax management, the owners of big domestic and foreign companies get away with tax evasion and smuggling the country’s wealth overseas. “Tax management needs to be for the public interest. It is time to formulate a progressive tax management,” he said.

Some 250 men and women from the Bangladesh Sramik Federation, Bangladesh Bhumihin Samiti, Bangladesh Krishok Federation, Bangladesh National Labor Federation, Ready Made Garment Workers' Federation, Jago Bangladesh Garment Workers Federation, and,Motherland Garments Workers Federation,  tribal leaders and students joined the mass gathering.

Speakers called upon the government to bring back about US$1.1 trillion smuggled outside the country and use the money for services and development projects. They challenged government to formulate a budget on the basis of the policy of 'taxing the rich, not the

In Indonesia, protest actions were held in seven villages spanning three islands -- Bali, Java and Sumatra -- between January 15-22. Food hawkers in one of the last traditional markets in East Jakarta protested the government's plan to tax nine basic food items and the uncontrolled inflation.Protesters in Wadas, Central Java put up mural installations on the impact of a hydropower project. Peasants in Lampung, Sumatra took up high living costs and land inequality.

There were physical and online consultations in Pakel, East Java;  Indramayu, West Java; Mount Wayang, West Java; Bali and Jakarta. Pakel is a village fighting to reclaim the working land, a 1000 year-old fight. The community in Indramayu is fighting against coal power plant, including Cirebon.Women leaders in the MuaraBaru urban village in North Jakarta, known as the most marginalized in the country, held several meetings to strategize towards engaging the national government on evictions, the right to water, among other issues. KRuHA, Women Forum for Social Justice, and the Household Assistant / Housemaids Union work together in the area.

In India,where the wealth of Indian billionaires has more than doubled during the pandemic while 46 million people are estimated to have fallen into extreme poverty in 2020 (nearly half of the new global poor),“Rising Inequality” was the focus of a discussion-forum with Dalit activist and intellectual P. Deekaiyya, feminist thinker Vani Periodi and writer Shoukath Ali, at the open amphitheater of the School of Social Work RoshniNilaya in Valencia, Mangalore. Organized by the Citizens’ Forum for Mangalore Development and led by Vidya Dinker and friends, the gathering brought together around 70 activists, thinkers, grassroots leaders keen to fight inequality.

Nacpil called for intensified campaigning to advance a comprehensive set of demands for tax and fiscal justice, stressing the urgency of ‘transforming our tax and fiscal systems to make them ‘work for people and the planet.’ APMDD’s statement issued on 18 January 2022, A People’s Manifesto: Make Taxes Work for People and the Planet,” summarizes these demands, building on the analyses and positions articulated by APMDD and its members and partners in various actions and consultations on tax and fiscal justice:

A People’s Manifesto  advances the following demands:
• Tax the Rich, Not the Poor
•Make Taxes Work for Women and Other Marginalized Sectors
•Reclaim public services; increase and mobilize public funds for fulfilling peoples’ rights and needs!
•Make MNCs Pay Their Share! Stop Corporate Tax Abuses and Other Illicit Financial Flows (IFFs)
•Advance Tax Justice in the Extractive Industry
•End Inequalities in global tax rules and rule-making
•System change, People First Before Profit!

The week of protest kick-started with an activity with labor groups in the Philippines on 16 January with some 150 workers, including leaders from 13 unions in Metro Manila, participating in the event. Held in Valenzuela City under the banner theme, “Workers Unite to Fight Inequality!” and organized by APMDD and the Bukluran ng Manggagawang Pilipino (Solidarity of Filipino Workers) it amplified the workers’ call on the Philippine government to #TaxTheRichNotThePoor.

Discussion groups, press conference, and other ‘build-up’ activities, including a webinar by APMDD on 18 January,  were also held during the week,  in the lead up to the actions on 21 January.