Illicit financial flows and promoting gender equality through tax systems
Tax has historically been seen as an overly technical issue reserved for experts in the field. However, it is clear that it can be used to address inequalities and especially gender inequalities, and so it is an area that must be recognised as a feminist issue.
Every year representatives of member states of the United Nations gather in New York for the annual Commission on the Status of Women (CSW). The United Nations defines it as “the principal global intergovernmental body exclusively dedicated to the promotion of gender equality and the empowerment of women”. These representatives come from across the world to take stock of progress made in the fight for gender equality and to set solid policies to advance this work.
Tax justice and women’s rights
The theme of this 61st CSW was “Women’s Economic Empowerment in the Changing World of Work”, and it was the battlefront for a wide range of issues affecting women’s ability to enjoy their rights of movement and political, economic and social participation. Fitting into this theme was the issue of tax justice and its intersection with women’s rights.
The African Union (AU) and United Nations Economic Commission for Africa (UNECA) set up a high level panel to look into the phenomenon of Illicit Financial Flows (IFFs) from Africa. Their report, released two years ago, conservatively puts the amount of financial flows illicitly leaving the continent at US$50bn. Therefore, for gender economic activists, the correlation between the amount of money developing regions such as Africa lose against the backdrop of already under-resourced social services that are mostly used by women is stark and extremely worrying. Maternal health care and girl child education are classic examples of marginalised services in many of our countries. The lost billions of dollars takes away from funding that could have gone into services that women in the global south so desperately need.
Two years ago the world met at the Financing for Development meeting in Addis Ababa, and the outcome of that meeting for many developing countries was that they would have to rely a lot more on domestic resource mobilisation (DRM), and taxation is a large part of DRM. However, to ensure the collection of enough revenue for development through a progressive taxation system, the state must collect taxes fairly as well as distribute them equitably. It is for this reason that the issue of tax and gender justice was amongst the issues brought up at the 61st CSW. There was a concrete push to have taxation recognised as a women’s rights issue, but also a focus on illicit financial flows which was largely pushed by the global south and specifically African voices who feel the effects of IFFs a lot closer to home.
IFF is not a mere technical issue
It was greatly disappointing to hear the American government’s closing statements where they relegated illicit financial flows to illegal activities such as bribery, tax evasion, money laundering and corrupt practices, whereas from the African High Level Report on Illicit Financial Flows, it encompasses a lot more: 60% of all IFFs are through commercial activity. They also said that discussions of these topics are best left to technical experts with “the appropriate expertise and mandate to address these issues”. From an African perspective, we know that issues of IFFs are very closely connected to human rights and within that realm – women’s rights. At the heart of it, IFFs are simply big corporations not paying their fair share of tax, which in turn puts a burden on citizens of the country in which they are operating. The most marginalised bear most of the brunt – a lot of the time, this being women, either as exploited workers in the lowest parts of the value chain, or subsidising care work which governments are not able to pay for – taking care of the young, the old and the sick.
Tax as a feminist issue
It is widely accepted that tax has a vital role to play in creating more equality for women, and a number of things can be done to move in that direction. At a very basic level, tax must be recognised as a feminist issue as its implications for women are too large not to be considered in the fight for women’s equality from a financing and redistribution angle. At national levels, we must continue to push for progressive tax systems that ensure gender budgeting takes place, making sure that tax revenues are raised and spent in ways that promote gender equality.
National tax systems must also be formulated so as not to discriminate against women by, for example, having an over reliance on flat consumption tax which is a burden usually carried by women as they buy day to day goods for their households. Tax systems should be recalibrated to collect more direct tax from income, wealth, high net worth individuals and to ensure that big multinational companies also pay their fair share of tax.
There is also some work to be done at international levels with the push for a more inclusive global tax body to be set up within the auspices of the United Nations, as currently global rules around tax are being set up by the OECD which does not take into consideration the priorities of countries in the global south who are indeed the biggest net losers in terms of IFFs. Currently, the global tax architecture is regressive and flawed and in fact goes a long way in facilitating tax avoidance, creating a bias in favour of not only high net worth individuals, but – importantly – big multinationals that operate in the global south, especially in the extractive sector.
These recommendations were what civil society, especially from Africa, pushed for at the 61st CSW this year, and it is our hope that the seeds of change regarding tax have been planted. We now start the journey of ensuring they bloom to bring us a few steps closer to realising women’s equality for the generations to come.
About the author
Crystal Simeoni is Head of Advocacy at the African Women’s Development and Communication Network (FEMNET).