ADB's Asia Pacific Tax Hub a Trojan Horse
by Pooja Rangaprasad and Jeannie Manipon
April 6, 2022
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.
APMDD members in India poised to launch campaigns calling for tax and fiscal policies that benefit women and children
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.
APMDD holds forum on “Women’s Voices for Tax Justice: Women, Mining and Climate”
As part of the Global Days of Action for Tax Justice for Women’s Rights, APMDD and TAFJA held an online forum on 24 March 2022 to listen to women’s voices for tax justice and explore how mining and illicit financial flows impact on women’s rights and resilience in the face of an alarming climate crisis.
APMDD coordinator, Lidy Nacpil, called mining, climate, and illicit financial flows a ”triple whammy on women”. She said most of the countries of the South have extractivist economies as a legacy of the colonial past.
“The continuous extraction affects local communities where mines operate with pollution and extraction of resources during the course of mining… But certain types of extraction affect even far away communities. That is in the impact on climate, especially the continues extraction, production and consumption of fossil fuels which is responsible for 75 percent of global greenhouse emissions that has triggered and is escalating global warming and climate change.”
She emphasized that fighting for tax justice in extractives is not an easy fix. “Extraction has to be done in ways that economies will benefit but the environment is not destroyed. We need to stop the current tax incentives given to mining companies which encourage them. We need to punish, penalize, drive away these foreign mining companies, who do not only abuse countries’ environments, but their own workers,” she said.
“The climate crisis tells us we cannot take too long to take action. Policy changes are urgent. We need to work hard and fast,” Nacpil said, stressing the importance of women “who won’t stop at nothing to protect their children” in the fight.
Hoang Phuong Thao of Action Aid Vietnam noted the need to “unpack the reality of how inequality has increased significantly through the multiple crises that we have gone though in the past few years, and especially the crises of climate change and COVID -- and the reality that governments are trading off citizen’s rights for the benefit and profit of corporates."
“In the race to the bottom, ASEAN countries are trying to reduce corporate income tax to attract investments, with the hope that the trickle-down effect will turn into employment. But in fact our people -- especially our women, our women workers -- are suffering from loss of lands and livelihoods because of waters rising, suffering being pushed out of the labor market, becoming informal workers, becoming workers that have no protection,” she said.
Perspectives of women in mining-affected communities and gendered impacts of extractivist activities were discussed by Fara Diva Gamalo of the Freedom from Debt Coalition-Philippines and Srishty Anand of Oxfam-India. Gamolo spoke of a community in Leyte province where hundreds of rice fields have been destroyed by Chinese mining company, extracting black sand and shipping it out to China, since 2010. “Not only livelihoods have been destroyed, but also fresh water sources are depleting because of the mining,” she said.
Illicit financial flows in the extractives sector and impacts on women was discussed by Meliana Lumbantorua, a program manager of Published What You Pay Indonesia. “For Indonesia, tax is a dominant revenue source, but mining corporations have been using loopholes in tax laws for tax avoidance,” she said.
“The current crises have been especially hard on women. We have to push those ‘status quo-ists’, the financial profiteers and profit shifters, those who listen only to the rich, and those fossilized defenders of fossil fuels, to move towards cleaner, greener, more sustainable alternatives and system change,” said Vidya Dinker of the India Social Action Forum.
“We honor women who continue to lead the fight against mining and many fights for tax and gender justice, for climate justice. Women who, despite being marginalised from decision making in all spheres of life, including on financial matters, demand transparency, accountability and inclusiveness in financial systems, and are also in the frontlines of crafting transformative economic visions beyond extractivist economies,” Jeannie Manipon, APMDD Development Finance program manager, said at the conclusion of the forum.
See video of the forum here
SEA civil society groups resolve to advance advocacies for tax justice and the rights of workers, farmers, and women
Worsening inequality and climate impacts, unfair trade and global value chains, flawed tax systems and inadequate revenues to finance post-COVID recovery were tackled at a regional workshop organized by the Asian Peoples’ Movement on Debt and Development (APMDD) and Perkempulaan Prakarsa on 23-25 March 2022 in Bali, Indonesia. Participants from civil society groups in Southeast Asia resolved to strengthen their actions and collaborative campaigns for economic justice in the lead up to the G20 Summit slated to take place in November.
It was the first face-to-face civil society gathering convened by the APMDD and the Prakarsa under the banner of the Tax and Fiscal Justice-Asia (TAFJA) since the pandemic lockdowns in 2020. Close to 30 participants from Indonesia, Malaysia, the Philippines, Thailand, and Vietnam attended the workshop.
Ah Maftuchan, Prakarsa executive director, said that CSOs should seize various opportunities to continue the momentum of campaigning for economic justice. He noted that the Summit of the G20 or Group of 20 in November this year in Indonesia and in India in 2023 would be important advocacy moments. Prakarsa is in the leadership of Civil 20 (C20), a civil society platform to engage the G20 in political dialogue.
Lidy Nacpil, APMDD coordinator, said the current multiple crises that encompass health, food, financial, and climate crises challenge advocates to step up our campaigns for economic and climate justice. “The scale of relief needed, especially by those deeply affected economically, requires multi-government agencies to mobilize for the needs of people. Unfortunately, most proposals have not moved away from the usual ‘capital access’ and low-interest loans.”
Proposed solutions follow the current and flawed logic of the global economic system, Nacpil pointed out. “The major failure of this usual approach is that a bigger part of the wealth flows to richer northern countries, while the resources of poorer nations continue to be exploited… Recovery is being used by those exploiting the global system. What we need are genuine rebuilding and transformation,” she said. Nacpil cited the 15% minimum corporate tax proposed by the OECD in what they call the Two-Pillar Solution on Base Erosion and Profit Shifting” as an example of a false solution that does not benefit the peoples of the Global South. The OECD proposal is criticized by many CSOs as a ‘Tax Deal of the Rich’.
The workshop aimed to hone the campaigning skills of TAFJA members and other CSOs, and to contribute to shifting the discourse on tax incentives, ending the race to the bottom in tax competition, curbing tax avoidance and evasion, and strengthening the advocacy for increased resource allocation for social protection and public services especially for women.
Key Issues and Initiatives: Mapping Out Realities on the Ground
Through country presentations and mapping exercises, the participants shared about current initiatives and surfaced priority issues for campaigning.
Dinda Nuur Anisaa Yura of Solidaritas Perempuan (Women's Solidarity of Human Rights) in Indonesia spoke of human rights concerns arising from ill-advised projects that have resulted in environmental degradation. An example given by Yura is the Poso Hydro Power that early this year had announced support for the government’s effort for green energy. But, while the energy output is ‘clean’, the infrastructure construction has submerged farmlands which resulted in crop failures, endemic fish loss, loss of farmlands and food resources; and possible loss of cultural heritage.
Elaborating on the gender dimensions and layered impacts of the issue, she said that environmental degradation and the potential for disaster adds to the burdens of women who have to care for family needs and manage natural resources at the community level.
Mugheelan Sellathoray of the Monitoring Sustainability of Globalisation (MSN) in Malaysia spoke of the COVID lockdowns and the hardships suffered by frontliners, agriculture workers, migrant workers and those who lost their jobs. Meanwhile, there are families who are not getting subsidies for online education or any assistance when family members contract COVID-19. He said the political instability in the country added to the tensions as partisan politics slowed the provision of social protection measures.
Maricon Jesusco spoke about the Oriang women’s movement in the Philippines and its work on fighting inequality and women’s oppression. Oriang has led nationally coordinated actions to campaign for debt cancellation, tax justice, climate justice, and human rights. Reflecting on Oriang’s work in the province worst-hit by the 2013 Super Typhoon Haiyan, the strongest typhoon on record, she said that affected communities have not fully recovered and that rehabilitation assistance have mostly been extended to the business sector, not to the most vulnerable sectors.
Movements in the Philippines have also been involved in legislative advocacy. Vicente Barlos of the progressive coalition Sanlakas spoke about their push for the repeal of a martial law-era law that provides automatic appropriations for debt payments in the national budget. Another priority for Sanlakas is advocating for pro-worker reforms in the rules and regulations that govern recruitment and placement of industry workers by private employment. Sanlakas is also pushing for the adoption of a wealth tax, “buwis sa yaman, hindi sa kita” (tax on wealth, not just income).
Ha Thi Chu of ActionAid Vietnam (AAV) noted that among the key developments in the country are Vietnam’s commitments to stop building coal power plants and to zero emission by 2050. A new wage regime is also planned for the public sector, including the care sector by 2023. The situation of unpaid care workers is an important indicator to monitor gender equality progress until 2030, she said.
AAV, according to Ha Thi Chu, has several major advocacy actions and public campaigns for fair fiscal governance. AAV is advocating for the government to prioritize public welfare vs austerity measures, and for the Ministry of Finance to increase budget allocations for public health, prioritize the needs of people especially those in the informal workforce, and rebuild the economy. Vaccine equality and climate justice are also important advocacies. In all these advocacies, she said it’s important to bring the voices of peoples from the Global South, especially those excluded from negotiations like climate talks, to deliver a powerful message.
Pham Van Long of the Viet Nam Center for Economic and Strategic Studies spoke of ongoing research on the tax burdens of different sectors in Vietnam that will form the basis for the policy advocacy activities of the Vietnam Alliance of Tax Justice. He said the core of the current state budget revenue is value-added tax, accounting for 33.27% of total tax revenues. The business tax rate is stipulated by law to be 20 percent, lower than the 21.7% average tax rate for Southeast Asian countries in 2020. “The tax burden in Vietnam is excessive and reforms are required to promote growth,” he said, adding that Vietnam is the lowest income country among similar countries in the ASEAN, but its share of tax revenue/GDP is the highest.
Participants surfaced other priority issues during a facilitated mapping exercise. Topping the list are:
hunger across sectors, and increasing demand for social care and social protection; worsening inequalities, and continuing male dominance especially in the agriculture industry; labor and workers’ issues including low minimum wage and vulnerabilities of migrant workers;
inadequate domestic revenue to finance post-COVID recovery and need for alternative domestic revenues and fair tax-based solutions; debt trap of low and middle income countries and austerity conditions imposed; regressive taxation system; G20 proposed global minimum corporate tax; tax incentive competition; and
exploitation of natural resources and impacts of climate change; the need for transparency, accountability and participation in climate finance, and for just climate and energy transition.
Food, Agriculture, Trade, and Tax: Value Chains and Fiscal Policy
This panel discussion underscored the importance of analyzing global value chains, especially in food and agriculture, to see how these shape the economies of developing countries and impact on the situation of farmers and food producers. Resource persons of this session were Dati Fatimah (Indonesia), Thanh Nguyen Duc, Ph.D.(Viet Nam), and Wanun Permpibul (Thailand) with Herni Ramdlaningrum of Prakarsa moderating.
In Viet Nam, there has been a deliberate push for getting bigger shares in the global market for its agricultural products. Dr. Nguyen said that Vietnam emerged as a major coffee producer following a deliberate publicly-supported move into the sector with a focus on cultivating the flavourful Robusta beans. As a result, between 1980 and 2000, Vietnam went from producing 8,400 tons of coffee to producing 900,000 tons.
Wanun Permpibul said farmers in Thailand are now pushed to produce for the global market but for farmers rice is not a commodity but a livelihood. She shared that traditionally in Thailand rice is grown for consumption and only what is left is sold. The problem of the global rice value chain is that the “farmers, our food producers, are not properly recognized,” she said.
Dati Fatimah pointed out that economies are not engaged in the global value chain (GVC) on an equal footing.. She said countries differ in where they are located in the GVC with upstream countries, mostly from the Global North, possessing knowledge of the process and processing the raw materials and therefore benefiting more. Farmers downstream of the value chain, have no say in policies, she noted.
The discussion on food and agriculture continued in breakout groups. Participants discussed free trade impact upon local farmers (e.g. IPRs), sea pollution impact on fisher folks, farmers’ lack of access to production inputs, and the lack of acknowledgements of women’s role in food production.
For food security for the world, the group identified the adoption agriculture traditional system, the Subak system, a water management (irrigation) system for the paddy fields on Bali island, Indonesia. They also resolved to collect data on agriculture supply chains and to dialogue with MPs and government. Also suggested was the holding of a Southeast Asia farmers’ festival and joint campaigns with alliances to coincide with events like the UN Food System Summit or around the dates of the adoption anniversary of the anniversary of the United Nations Declaration on the Rights of Peasants and Other People Working in Rural Areas (UNDROP) or the UN Declaration on the Rights of Indigenous Peoples (UNDRIP).
Campaigning for Economic Justice
In campaigning for economic justice, issues in global economic governance and continuing power imbalances and asymmetrical relations need to be addressed. These are also reflected in current global tax rules and rule making. Jeannie Manipon, APMDD Development Finance program manager, asserted that “national tax systems in many parts of the world are legacies of our colonial history, and thus tilted towards serving the interest of the former Western colonial powers, multinational corporations, and local elites.”
She said the grave inequalities, within and among countries, and elite and gender biases must be addressed to overcome crises and build a sustainable people’s recovery. Manipon also presented a comprehensive tax justice advocacy and campaign agenda contained in the People’s Manifesto: Tax the Rich, Not the Poor! Make Taxes Work for People and Planet. The agenda and policy recommendations were hammered out by the APMDD through country consultations, joint actions and the People’s Assembly for Tax Justice held on 30 October 2021.
The People’s Manifesto puts forward seven demands for fundamental reforms to address flaws in tax systems, policies, and ‘rule-making’ that exacerbate inequalities. The first demand is to “Tax the Rich, Not the Poor”. Governments are being called 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.
The second demand is to “Make Taxes Work for Women and Other Marginalized Sectors”. The demand requires that tax and fiscal systems address gender biases and discriminatory policies that deepen inequalities and reinforce economic and social exclusion. The five other demands are *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!; and, System Change, People First Before Profit!
The work of the Tax and Fiscal Justice-Asia was also discussed in this session by Becky Lozada, communications staff of APMDD Development Finance program. Formed in 2004, TAFJA is a regional alliance united in campaigning for greater transparency, democratic oversight and redistribution of wealth in national and global tax systems. It has working groups on tax and gender justice, on tax Justice in the extractives industry, on tax and ecommerce, among others.
Lozada spoke on the TAFJA position hammered against the “tax deal of the rich” proposed by the Group of Seven in June 2021 for a 15 percent global minimum corporate tax rate. She said TAFJA along with other tax justice groups has long called for at least 25 percent as a global minimum so that resources can be generated to tackle social-economic crises and to provide essential public services to people. “TAFJA has thrown its weight behind the call for democratic and transparent mechanisms to address the global dimensions of tax abuses. Part of the TAFJA press statement in June reads ‘with countries of the Global South most severely encumbered by foregone corporate tax revenues, we reiterate our call for a UN Tax Body towards more just and fair international tax rules,’” she said.
A breakout group on Inequalities and Economic Justice, looked into the lack of social protection for indigenous people, the situation of undocumented and informal workers, women’s lack of access to policy processes, development projects that impact negatively on women, climate change and energy, and free trade agreements.
They also discussed tax issues from the impact of taxes on rice prices and availability, VAT, and the need to enforce higher corporate taxes, and growing calls for a wealth tax like the windfall tax imposed by Malaysia.
The group recommended five points to raise these issues, especially before the G20, GCF Board Meeting, UNFCCC, Regional Comprehensive Economic Partnership (RCEP) processes:
-Involving women's participation during the decision making process for any project or program implemented in the community
-Empowering women to fight the difficult situation impacted by inequality economic policy by creating an economy creative SME independently
-Reducing retail tax (VAT) for consumers especially products mostly purchased by women and family goods, and increasing corporate tax to get distributed transparently for public facilities development and social protection program
-Ensuring the economic protection of women, including informal worker, by providing guaranteed access to availability of facilities, access to business permits for poor women.
-Stop the programs and projects that ignore human rights, prioritize projects that are environmentally sustainable, gender responsive and side with women.
Gender and marginalized communities
This session, in solidarity with the Global Days of Action on Tax Justice for Women’s Rights, featured Titi Soentoro of AKSI! and Hoang Phuong Thao of ActionAid Vietnam as resources persons with Aryanto Nugroho of Publish What You Pay Indonesia moderator.
Expounding on gender and economic justice, Soentero gave a feminist perspective in looking at the issues, especially policy measures to solve problems that miss the mark because of patriarchy. “Women are not in decision processes, whether in home or in governments,” she said, noting that this situation leads to bad decisions. An example given by Soentero is how in Java a geothermal project meant for “clean” energy resulted in trees being cut down and environmental destruction. “Women have had to walk farther to fetch water, because their traditional source of water was now controlled by the geothermal project,” she explained.
Thao emphasized the urgency of reclaiming public services as part of efforts to end inequality and poverty. She said tax and fiscal justice should go together but this will not happen under the mindset of the race to the bottom in corporate taxation aggressively being proposed by the G7-G20 and OECD.
A session on advocacies in Bali also focused on the situation of women. Nengah Budawati, of Women Crisis Center-LBH Bali gave a glimpse into the grim realities of women in Bali. She said they have to contend with violence , including sexual assaults, discrimination even from members of their families especially if they bear no son(s), and undervaluing and non-recognition of women’s work. Women are bullied when the land they till yields little harvest; men are known to leave their family when they have only daughters but still inherit everything. There are cases of sexual crimes committed by “male holy persons” that go unpunished.
“The Women Crisis Center-LBH led by Buda, as she is fondly called, ,provides shelter and training for women to run livelihoods, exclusively to help women, for “the victims to help other victims,” as they are “usually ignored by society,” she said.
Women’s Voices for Tax Justice: Women, Mining and Climate
As a contribution to the Global Days of Action for Tax Justice for Women’s Rights called by the Global Alliance for Tax Justice (GATJ), APMDD and TAFJA also held an online forum to listen to women’s voices for tax justice and explore how mining and illicit financial flows impact on women’s rights and resilience in the face of an alarming climate crisis.
Read more here.
Campaigning on Global Tax and other Finance and Development Issues
Dereje Alemayehu, executive coordinator of the Global Alliance on Tax Justice (GATJ), addressing the workshop remotely, emphasized the importance of pushing for inclusive processes that will allow the Global South, especially civil society, to truly have a say and be heard on financial policies. He pointed out that the G20 follows the lead of the G7, including in supporting the “Inclusive Framework” that pushed for the new minimum corporate tax rates that benefits corporations and the big economies rather than countries of the Global South.
He called on civil society to further put pressure on national governments to reject the tax deal of the rich. There is urgency to this issue because the OECD is now moving to put the legal and institutional arrangements for the “tax deal of the rich” in place, he said.
Another decision-making moment was the focus of the talk of Pooja Rangaprasad, policy director, Financing for Development, Society for International Development (SID). She called attention to the inputs of civil society groups for a fourth UN Summit on Financing for Development or g Monterrey+20 Summit. She said 2022 marks 20 years since the first International Conference on FfD was held in Monterrey, Mexico that resulted in a landmark international consensus to address key financial and related issues pertaining to global development which took place just as the world was reeling from economic recession. “Such a summit has never been more urgent again given the financing needs in the context of the COVID-19 pandemic, and future summits including the UN Social Summit in 2025 that will only succeed if urgent reforms of the global financial system are advanced. It is time for UN member states to convene the 4th FfD conference/Monterrey + 20 to agree a new global consensus on an economic,” Rangaprasad said.
The Consensus of the FfD in 2002 included the critical goals of eradicating poverty and promoting sustainable development to advance to a fully inclusive and equitable global economic system. The FfD included the consideration of an international debt workout mechanism and equitable international taxation policies.
Taxation of the digital economy and e-commerce remains one of the thorny issues in global tax policy debates, and where interests of countries in the global north and global south tend to collide. Tony Salvador of the Third World Network (TWN) explained that according to current global tax rules taxation of corporations is based on where they have physical presence or permanent establishment (tax treaty) but digital platforms do not need physical presence to do business in market jurisdictions. He said national governments should decide on how and what taxes are collected from digital corporations doing business in their jurisdictions. “This cannot be left to an international agreement as sought by the G7, G20, and the OECD. We need to push national legislatures to pass or maintain digital services taxes or otherwise tax foreign on eCommerce transactions.” Reforms are also needed in the international tax architecture, and the United Nations, according to Tony, is the proper venue to discuss international tax matters and called for support for the proposed UN Tax Convention.
The training workshop was a breakthrough face-to-face event for the organizers with many safeguards including various COVID tracking measures and tests for all participants to hurdle. It was held just a few days after C20 Indonesia staged the C20 Kick Off Ceremony & Meeting titled Listening to the World in Bali, in 7-9 March 2022.
Training participants came from Prakarsa, APMDD, TAFJA and network partners, including
∙ From Indonesia, participants came from
-Aksi! for Gender, Social, and Ecological Justice
-Publish What You Pay Indonesia
-Women Crisis Center - LBH
-Solidaritas Perempuan (SP)
-Transparency International Indonesia
-Association for Women's Small and Micro Business Assistance or ASPPUK
-Agrarian Reform Consortium (KPA)
∙ From Malaysia, the research based advocacy organization Monitoring Sustainability of Globalisation (MSN)
∙ From the Philippines, Oriang women’s movement and Sanlakas
∙ From Vietnam, ActionAid Viet Nam and the Viet Nam Center for Economic Studies and Strategic Studies (VESS)
Resource persons from Climate Watch Thailand and Indian Social Action Forum joined online sessions.
The training workshop is part of the activities of the Oxfam-supported project, “Fair for All: Improving economic-social justice through agriculture-value chains and fiscal policy reform.”
After the workshop, some participants sat down with groups in Indonesia, and with representatives from other countries also joining in via a Zoom link, in a meeting of the C20 Working Group that was opened up to workshop participants.
Facilitated by TAFJA’s Vidya Dinker and Prakarsa’s Herni Ramdlaningrum, those present were given an overview of the G20 by Ramdlaningrum. APMDD and Prakarsa committed to work together with the Working Group on Taxation and Sustainable Finance that has put on the table proposals for increased tax revenues to finance COVID-19 programs and climate mitigation under SDGs 2030 and Paris Agreement 2050; ecommerce taxation; and, ways to push for a more inclusive inter-governmental tax body,
The Working Group shared their concerns and discussions on the tax proposals from the G7 countries for global minimum corporate tax of 15% that does not effectively tackle profit shifting and tax dodging practices by multinational companies. The plans of the working group will be hammered out further and presented in various engagement opportunities up to the G20 Summit in October.
A briefing on a ground-breaking proposal for fair and inclusive global solution to economic crisis was provided by Tove Maria Ryding, tax justice coordinator of the European Network on Debt and Development (Eurodad). She spoke on a civil society proposal for a UN Tax Convention, launched on March 10, which aligns international tax governance to key global commitments and obligations, including human rights, equality, gender environmental protection and the Sustainable Development Goals. The United Nations is the forum that leads on these issues and, at the same time, it is the only truly universal body that exists. That makes the UN the obvious place to anchor a truly global convention on tax. Bringing the Convention in the United Nations would provide all countries equal footing in the discussions, she stressed.
The 17th G20 Heads of State and Government Summit will take place in November 2022 in Bali on the theme “Recover Together, Recover Stronger”. Formed in 1999, the Group of Twenty or G20 consists of the world's major established and emerging economies, the 19 countries -- Argentina, Australia, Brazil, Canada, China, Germany, France, India, Indonesia, Italy, Japan, Mexico, the Russian Federation, Saudi Arabia, South Africa, South Korea, Turkey, the UK, and the US -- and the European Union.
We, 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
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:
- 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.
- 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.
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.
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.
- 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.
- 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.
- 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.