As the G7 Finance Ministers’ Meeting in London concluded with exalted acclaim from its member states on the “groundbreaking overhaul” of global tax rules, movements raised alarm bells against the impact of the G7 commitment to a 15% minimum global corporate tax rate. Finance Ministers of the Group of 7 (G7) – composed of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – meet annually ahead of the G7 Summit attended by heads of state.
“The G7 commitment setting a global minimum corporate tax rate of 15% is a highly regressive and undemocratic blow to the clamor for tax justice by peoples in the Global South,” says Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development (APMDD). “90% of the world’s population stand to suffer the consequences of a decision by the richest 10%.”
APMDD’s statement follow the report released by the United Nations High Level Panel on International Financial Accountability, Transparency and Integrity (UN FACTI) in February 2021, recommending a global minimum tax rate of at least 25-30% of corporate profits to ensure a high enough amount for equitable redistribution of recovered revenues that can be used to fund essential public services and long-term sustainable development.
“Global South countries lose $427 billion in tax revenues and 52% of their combined public health budget yearly from corporate tax abuses, striking at a critical time for fiscal systems that are at near collapse due to debt for pandemic relief and the lethal costs of the vaccine apartheid engineered by countries in the Global North,” Nacpil adds, citing the findings of The State of Tax Justice 2020, a study documenting the tremendous disparity in the impacts of corporate tax abuses on public health systems between countries in the G7 and the developing world.
The UN FACTI Report also recommended the establishment of a tax body on the level of the United Nations where all countries are represented on an equal basis. Nacpil calls attention to the G7’s attempt to frame the agenda on global tax reform ahead of the UN Convention:“the G7’s systematic attempt to steer the direction of global tax rules to further their interests and benefits represents a blatant disregard for the disproportionate burden of foregone revenues borne by peoples in the Global South”
When asked on their proposed alternative to the G7 deal and the incoming G20 Summit, Nacpil reiterates APMDD’s longstanding demands. “We reject the rules set by an exclusionary rich man’s club’ for the rest of the world. We call on world leaders, leaders of developing countries, and civil society to fight for a just agreement through a UN Tax Convention and for an inclusive, democratic and transparent UN Tax Body.”
APMDD’s Campaign on Tax, Women’s Rights and Gender Justice
REWRITE THE RULES! MAKE TAXES WORK FOR WOMEN!
The campaign for tax and gender justice is one of APMDD’s priorities in its work on Development Finance. Tax and fiscal systems are embedded in deeply entrenched patriarchal systems, structures, social norms and practices. They reflect direct and indirect gender biases and assumptions – in many countries in Asia, tax systems do not recognize women as independent economic agents or as heads of households. Unpaid care work, largely borne by women, are not accounted for and are rendered invisible in tax and fiscal policies. Women, especially those from poor and marginalized sectors, take on a disproportionate share of the negative impacts of regressive and discriminatory tax and fiscal policies, and have the least voice, power and influence in decision-making on these policies. It is widely known that indirect taxes such as the Value Added Tax (VAT) or the Goods and Services Tax (GST) hurt women and the poor the most. This is because women tend to earn less and are over-represented in the informal economy, have less access to and control over land, financial resources and other productive assets necessary for their economic survival and independence. And yet women tend to spend a greater share of their income for household necessities.
Women are also exposed to multiple forms of gender-based violence at home, in the world of work and in times of natural disasters and emergencies, but have less access to public services essential to their survival and to living a life of dignity. Where public services are available, they are often inaccessible to women in marginalized communities or remote areas or are unresponsive to their specific needs and conditions. Corporate tax abuses and illicit financial flows that rob economies of revenues that could and should be used for public services negatively impact on women’s lives.
Tax and fiscal policies should not be used as instruments for reinforcing inequalities; rather, they should be transformed into tools for addressing inequalities and advancing gender justice. Women have stood and continue to stand in the frontlines of collective action for economic and gender justice, increasingly taking on tax and fiscal justice as integral to this campaign agenda.
While APMDD has been taking on tax and gender justice as part of its campaign and advocacy agenda for many years now, a more systematic campaign was launched in 2019 under the banner theme, “Make Taxes Work for Women”
The campaign objectives are :
1. Work towards reducing unfair tax burdens on women and ending discrimination in tax policies by:
- raising public awareness about regressive and discriminatory tax policies;
- building support for progressive and gender-responsive tax and fiscal policy reforms, especially policies that serve to represent, recognize, redistribute and reduce unpaid care work;
- campaigning for increased allocation of tax revenues for quality, gender-responsive public services.
2. Expose the flaws of domestic and international tax systems and policies that enable corporate tax abuses and illicit financial flaws, and work towards policy, institutional and structural changes in support of progressive and just taxation by:
- Raising public awareness about corporate tax abuses and illicit financial flows and their gendered impacts and implications for women’s human rights;
- Increasing the visibility of ‘tax and gender’ policy recommendations and feminist articulations recommendations in national, regional and global platforms; and
- Building support for the establishment of transparent and democratic intergovernmental tax commission with sufficient resources under the United Nations, to ensure that all countries can participate on a truly equal footing in the decision-making on global tax rules.
3. Build the power of activists around the world to campaign against gender discrimination and tax injustice, and urge the public and the women’s movements to take on tax justice issues as an integral part of the struggle for women’s rights and economic empowerment.
- Increase and strengthen women’s participation and leadership, especially from the grassroots, in movements for tax and economic justice;
- Strengthen capacities of social movements, grassroots organisations, and other CSOs to campaign against gender discrimination and tax injustice;
- Build and strengthen a core of women leaders from among grassroots organisations, social movements and other CSOs who will advance and sharpen feminist analyses and articulations, and help sustain the work around tax and gender justice;
- Mobilize gender champions in parliament and academia, and build support from decision makers.
Reduce unfair tax burdens on women
Remove gender biases and discriminatory provisions in tax and fiscal policies
Recognize, represent, reduce and redistribute unpaid care work
Increase tax allocation for quality, gender-responsive public services
Stop corporate tax abuses, stop illicit financial flows (IFFs). Establish an inclusive, democratic, transparent and equitable inter-governmental mechanism for tax cooperation under the auspices of the United Nations
Key Activities in the Campaign on Tax, Women's Rights and Gender Justice (2021-2022)
Organizing and Country Consultations
Focus will be on setting up and consolidating a Campaign Committee and continuing regional and country consultations to develop campaigns and support country activities.
This involves mainly orientation sessions on Framing Feminist Taxation and Campaign and Advocacy Training, including legislative/policy advocacy and communications training.
Key advocacy moments include
Asian Women’s Day, 8 August, initiated by APMDD in 2019;
“16 Days of Activism against Gender-Based Violence” – 16 Nov-10 December;
Women’s Month, International Women’s Day (March 8);
Global Days of Action to “Make Taxes Work for Women”;
and, the UN Commission on the Status of Women session in March.
There are also social media actions and activities such as 8for8, our social media campaign with theTAFJA Tax and Gender Group every 8th of the month to bring attention to our demands for tax and gender justice and “Our Stories”, a comic strip created with young female artists.
Situation and issue analysis on “’Burdens’, Biases, and Budgets”
‘Burdens’ – Gathering data and information to monitor the situation of women and analyze the multiple burden of women, through an economic and gender justice lens, looking at multiple and intersecting forms of discrimination (e.g. women’s social and economic situation, including health and care work, exposure to multiple forms of violence especially economic violence; access to public services)
‘Biases’ – Surfacing, identifying, analyzing direct and indirect biases in tax policies (e.g. impacts and implications of regressive tax policies like VAT/GST; discriminatory policies)
‘Budgets’ – Data gathering, monitoring, analysing national (or local) budgets and fiscal policy in general through the lens of tax and gender justice; e.g. public spending for health (particularly women’s health); care work; and. how gender-responsive are national and local budgets, including looking at women’s participation and influence in decision-making on budgets.
Tax, Illicit Financial Flows and Inequalities
Engaging Parliamentarians and Mobilizing Women Parliamentarians
APMDD will engage parliamentary groups and women parliamentarians to advocate for the institutional adoption of tax and gender justice in their legislative programs and priorities. Progressive tax reforms to be supported include the elimination of value added taxes, introduction of wealth taxes, and, implementation of tax incentives reviews.
APMDD Campaign on Tax Justice in the Extractives Industry
Built on centuries of environmental pillage and wealth extraction in mineral-rich areas, the extractive industry has historically thrived in environments of financial secrecy, corruption, tax abuses and other illicit financial flows (IFFs). Social movements and mining-affected communities have long been waging fierce campaigns directed at the extractive industry, especially in the mines and mineral sector, calling attention to the destruction of livelihoods, unjust labor policies, environmental impacts, among others.
There is an urgent need to stop abusive practices by corporations in the extractive industry such as tax avoidance and leakages in domestic resource mobilization due to tax privileges and other incentives given to the extractives industry. This should be part of a thoroughgoing critique of regressive tax systems that heavily favor corporate and elite interests and enable illicit financial flows. Because of these abusive practices, the extractive industry not only contributes to the destruction of community livelihoods and the environment, and to increased exposure to climate change and its impacts, it is also a major factor in draining economies of the Global South of foregone revenues that could and should be used for funding public services.
APMDD’s campaign for tax justice in the extractives industry is based on the following key assertions:
As part of the shift away from EXTRACTIVISM, which is a key feature of the capitalist system
A major aim of our campaign on tax and extractives is exposing and resisting EXTRACTIVISM – 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) – in order to fundamentally reorient our economies towards prioritizing people and the planet.
As part of the fight against flaws of the tax system, abusive tax practices, and illicit financial flows that erode public revenues and pave the way for intense profiteering of corporations – especially of MNCs
The campaign is aimed at exposing the flaws of domestic and international tax systems and policies, the tax abuses of corporations - especially MNCs in oil, gas and mineral industries – that result in massive erosion of public revenues and intense profiteering at huge costs to people, communities, workers, the economies, and environment of Asian countries. It aims to achieve political (or other) wins, which shall serve to weaken the ability of corporations for IFFs, for plunder and greater accumulation of profits.
As part of the struggle for the democratization and redistribution of wealth and resources
The campaign for tax and fiscal justice, of which curbing illicit financial flows forms an important part, is in line with the peoples’ struggle for sustainable, democratic access to and control over wealth and natural resources. The campaign also aims at strengthening the voices of local communities, calling on governments to uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.
As part of efforts to effect changes in norms and standards, laws, and policies –
- to correct flaws in the tax system that diminish tax revenues from extractives industries and allow/facilitate tax avoidance and abuses by corporations;
- to curb and penalize tax abuses and tax avoidance by corporations and illicit financial flows from the extractive industries;
- to transform regulatory mechanisms over the extractives industry at different levels of governance;
- to build and shape strong public opinion towards seeking tax and fiscal justice for tax abuses in mining and other extractivist activities; and
- to strengthen movements and linkages among movements, build convergences and synergies across campaigns on IFFs, tax incentives, and public spending with human rights, gender justice, climate justice.
Ten Demands for Tax Justice in the Extractives Industry
The campaign advances the following demands:
- 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.
- Ensure financial transparency of and accountability from corporations in the extractive industries.
- Hold governments/parliaments, sub-national state bodies and their agencies to account for the tax abuses of mining companies and the complicity of local elites.
- Shut down harmful and abusive mining projects/companies.
- Institute and enforce tighter social, financial and environmental regulations and sanctions over the extractives sector.
- Cancel fiscal stability and other lock-in clauses in agreements with extractive industries, which restrict the fiscal and regulatory space of governments.
- Uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.
- Stop the plunder and exploitation of natural and human resources and move away from reliance on extractivist economies characterized by over-production and over-consumption.
- End the impunity of corporations in mining and other extractives industries in their tax abusive practices, including illicit financial flows.
Key Activities in the Campaign on Tax Justice in the Extractives Industry (2019-2021)
Primer on Potential Channels for Revenue Erosion, Profit Shifting, and Illicit Financial Flows in the Philippine Mining Industry
Through a research initiative, APMDD developed a comprehensive account of the institutional and legal environment that enables illicit financial flows in the Philippine extractives industry. The primer also presented cases of how this environment enabled abusive tax practices of three mining corporations in the Philippines.
Research on Harmful and Abusive Tax Incentives in Asia
As part of the Financial Transparency Coalition (FTC) Report entitled “Use and Abuse of Tax Breaks: How Tax Incentives Become Harmful,” APMDD conducted a case study on an Indonesian coal mining corporation to illustrate the channels through which fiscal incentives embedded in government-awarded mining agreements become vehicles of cross-border profit-shifting and tax avoidance.
DEEPENING UNITIES with members and partners on a campaign and advocacy agenda
APMDD participated and led activities in the Global Days of Action on Tax and Extractives as part of the Global Alliance for Tax Justice (GATJ) from November 2019 until November 2021. APMDD is also one of the convenors of the Tax and Fiscal Justice Asia (TAFJA) Tax and Extractives Working Group, which has held press briefings and discussions on tax justice issues in India, Indonesia, and the Philippines.
Together with the Tax and Fiscal Justice-Asia (TAFJA), and with the Alternative Information & Development Centre (AIDC) in South Africa and Churches and Mining Network (CaM) in Brazil, APMDD has co-organized webinars and information dissemination activities to promote demands of tax justice in the extractive industry in regional and global arenas.
PARTNERSHIPS with labor groups and communities to work together on tax and labor abuses in the extractives industry
Efforts to build constituencies in linking issues of tax abuses and violations of workers’ rights by mining corporations were strengthened in 2021, as APMDD co-organized the Asian Day of Action in November 2021 with workers’ movements jointly calling for strengthening tax and labor regulations in the industry.
APMDD continues to support country-level campaigns and advocacy work, with a view of holding mining corporations to account, ensuring financial transparency, and strengthening local communities’ voices in calls to transform tax and fiscal systems governing the extractives industry.
APMDD Statement on the 54th Annual Meeting of the Asian Development Bank
At this 54th annual meeting of the Board of Governors of the Asian Development Bank, we challenge the leadership and staff of the ADB to reflect seriously on its legacy.
For more than five decades, the ADB has left a trail of projects that have met strong and persistent resistance from citizens’ groups and peoples movements in many countries across the region. These projects have led to the displacement of communities and brought harm to health, livelihoods and environment.
The ADB has pushed loans that contribute heavily to the debt burdens of Asian countries, loans paid for by taxpayers money at the expense of essential services urgently needed by the majority of the peoples of Asia who struggle against pervasive poverty and inequality. These essential services have been further undermined by ADB’s push for privatization including in water and power sectors.
Contrary to its so called commitment to “achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty” - the ADB has been promoting a neoliberal paradigm that pins development on the growth of the private sector and of markets, insisting that profitability and commercial success is “correlated with development outcomes.”
We reiterate some of the long standing calls and demands of communities, peoples movements and civil society organizations in Asia, supported and echoed by our colleagues in the north in countries whose governments sit in the leadership of the ADB:
1. ADB must end its financing and support for new fossil fuel projects and withdraw its involvement in those under construction and in the pipeline.
Fossil fuel projects have negative impacts to the communities and environment around these projects and contribute heavily to the escalation of the climate crisis.
The ADB knows that fossil fuel energy accounts for about 75% of global greenhouse gas (GHG) emissions and that excessive accumulation of GHGs in the atmosphere drives global warming and climate change. Despite its pledge to address climate change, fossil fuel generation projects from 2009 to 2018 comprise 50% of the total installed capacity of all ADB funded energy generation projects. More than $8.9 billion went to fossil gas and $2.6 billion to coal.
Last August 2020, its own International Evaluation Department (IED) recommended that ADB revisit its Energy Policy and formally withdraw financing new coal energy capacity. This came in the wake of decades of campaigning by climate and environmental groups against ADB investments in coal and critique of the ADB energy policy adopted in 2009 that still left many loopholes, allowing ADB to continue funding coal power projects.
Early this year ADB embarked on a review of its Energy Policy Review, the first time in over a decade, and aims to have a new policy in place by November 2021. We demand that this new policy categorically states an all-encompassing end to involvement in coal energy. And the ADB must go further than this. It is urgent that ADB also declare withdrawal from expanding gas and oil projects in the region.
From 2018 to 2020, the ADB provided more than $2 billion worth of financing for gas and oil projects. And all signs point to its promotion of fossil gas as transition fuel. Fossil gas as a clean energy replacement for coal is a dangerous myth. Fossil Gas energy also emits GHGs including methane which is one of the most GHGs in its toxicity and impacts. New fossil gas projects will lock us into many years of dirty energy which people and the planet cannot afford. Immediate steps and a clear plan to phase out of oil is also needed as the process will be complicated and requires time which we are running out of.
Each year, our call against the Bank’s support for dirty energy intensifies in urgency. For every inaction towards the problem of fossil fuels, Asian lives and livelihood grow all the more vulnerable as they are situated at the frontline of climate change’s adverse impacts. This decade is most critical, as global climate actions in this period will determine whether it will still be possible to keep global temperature rise below 1.5 degrees Celsius from pre-industrial levels. The current level of warming is at close to 1 degree and peoples of Asia and around the world are already suffering devastating effects of extreme weather events and as well slow-onset changes.
2. ADB must heed the global clamor for cancelation of debts as one of the critical responses needed to enable countries of the Global to deal with the multiple crisis of the COVID pandemic, the economic crisis made much worse by the pandemic, and the escalating climate emergency.
The last few weeks have seen many countries in Asia suffer a huge resurgence of COVID, further swamping public health systems weakened by decades of neglect, and underscoring the need to address the inequality of access to vaccines. Public spending must prioritize peoples’ survival, instead of being spent to service debts.
In 2019 alone, just 16 of ADB's ”low to lower-middle income” developing member countries paid more than $6.4 billion to service public sector debts owed to ADB. Cancelling these debts could have freed up public money for peoples' survival.
ADB should begin immediately by canceling illegitimate debts incurred from harmful projects, such as fossil fuels and other dirty energy, failed projects, and projects which led to massive displacement of communities. The cancelation of these debts are not just based on need, it is a matter of justice.
ADB prides itself as being rooted in regional realities, and should be able to recognize right away what even a limited debt cancelation could bring. Thus far, it has echoed the World Bank in protecting its credit ratings, starkly manifesting a warped notion of priorities in these acutely difficult and uncertain times. There should be no question as to which path that ADB, with its development mandate, should be taking -- to prioritize the needs of developing member countries, already hanging barely above poverty thresholds even before the pandemic, with tens of millions of people who will be pulled into extreme poverty by year's end.
Further, ADB must not add to the unsustainable and illegitimate debt burden of its member countries in Asia and stop lending as the main instrument in the name of financing COVID 19 responses, economic rebuilding and climate action. As of December 2020, the ADB has provided around $18.2 billion in loans to the public sector as fiscal support in response to these crises. The spike in lending by public financial institutions during the time of COVID will leave countries of the Global South in deeper debts than ever before.
Loans come at a price beyond the financial cost and the impacts of debt servicing. The ADB has and continues to play a leading role in promoting a strategy of leveraging loans to promote private investments. Backed by the weight of its lending facilities and technical assistance, it has cleared the path for big business to take over vital sectors such as health, water and sanitation. By any other name, ADB's lending compels borrowing governments to systemically reshape their economic, financial, social and environmental sectors for neoliberal directions and ends. This should stop.
Wide swathes of the population are currently without the essential public services crucial to fight COVID-19, let alone surviving on a day-to-day basis. The private sector, the driver of growth privileged by the ADB and the World Bank, remains shamelessly profit-driven in a world gripped by COVID-19, and continues to oppose lifting the intellectual property rights system that serve as a barrier to ramping up supply for universal vaccination.
3. ADB should not promote other policy measures that further undermine the mobilization of domestic resources for responses to the pandemic and other crises.
The world faces the urgency of reforming national and global tax systems to curb illicit financial flows and put a stop to corporate tax abuses that bleed our economies dry, as has been underscored by the UN High Level Panel on Financial Accountability, Transparency and Integrity or FACTI in its report early this year.
Increasing domestic revenues through the adoption of just, progressive and gender-responsive systems and channeling these revenues to finance public services essential to people’s survival are urgently needed for COVID response. Moreover, they are key ingredients for building economies that are sustainable, transformative and less dependent on debt and aid.
However, the recent initiative of the ADB to launch a Regional Hub on Domestic Resource Mobilization (DRM) is disturbing. The strategic direction, assumptions and agenda that lie behind this new initiative need to be challenged. While noting the worsening situation of Asian economies due to the COVID 19 pandemic and falling tax revenues, the ADB worries that this leaves “little room to further increase external borrowing.”
The ADB is now increasing pressures for domestic resource mobilization, without regard for the real constraints and barriers for developing countries to raise public funds. It has created a Regional Tax Hub - without broad public consultation - that will reinforce the gross power imbalances in decision-making around global tax rules. The ADB Regional Tax Hub is explicitly designed to “assist” Asian countries to adopt OECD processes and standards. This is hugely problematic as it is likely to exacerbate one of the flaws in the international tax architecture -- the dominance of OECD countries’ agenda and the inequality of decision-making on tax and fiscal systems at all levels.
If ADB is to be true to its word of seriously addressing domestic resource mobilization as one of the key steps in overcoming the multiple crises, , it should begin with plugging the leaks which have been eroding the public funds of developing countries even before the pandemic.
In addition to payments on unsustainable and illegitimate debts, the leaks include the overly generous fiscal incentives regimes across the region, including zero or light-tax special economic zones, that the ADB itself encourages in line with the premium it places on providing an enabling business environment for the private sector as the engine of growth. It also includes the financial secrecy jurisdictions in the region that provide hiding places for corporate tax evasion and avoidance, profit shifting and illicit financial flows, within the region and across the world. In 2015 alone, Asian states lost billions in illicit outflows through trade such as Malaysia ($33.7 billion), India ($9.8 billion), Bangladesh ($5.9 billion) and the Philippines ($5.1 billion). These do not even include potential revenues from money laundering and other criminal activities.
The ADB must be overhauled as an institution - its neoliberal paradigm and strategies, its financial policies and instruments, its undemocratic governance system, its selection of projects and programs to support, its use of loans as leverage to reshape Asian economies according to its private sector and market driven growth framework. Or else, the ADB should be replaced with a democratic, accountable financial institution that will truly contribute to upholding the rights and welfare of the peoples of Asia and paving the way for just, equitable, resilient and post carbon economies.