REDESCA calls on States in the region to put human rights at the center of their fiscal policies

July 20, 2023

Washington D.C. - In the context of the first Latin American Summit for a fair, sustainable and equitable global taxation to be held in Cartagena de Indias, Colombia, the Office of the Special Rapporteur on Economic, Social, Cultural and Environmental Rights (REDESCA) of the Inter-American Commission on Human Rights (IACHR) calls on all Member States of the Organization of American States (OAS) to adopt a human rights approach as a central aspect of all negotiations, policies and actions on taxation.

REDESCA notes with concern that countries in the region often collect significantly less tax revenue than more advanced economies and their tax structures are often regressive. At the same time, multinational corporations and wealthier individuals often take advantage of loopholes in the tax systems of different countries, shifting their profits from high-tax to low-tax jurisdictions to minimize their tax obligations, i.e., to pay less or no tax, depriving States of valuable resources to guarantee human rights, particularly ESCER. According to the Economic Commission for Latin America and the Caribbean (ECLAC), tax evasion in Latin America and the Caribbean reaches US$300 billion, equivalent to 6.1% of the regional GDP. The latest studies estimate that 27% of Latin America's wealth is located in tax havens.

As the IACHR and REDESCA have already noted, increasing the progressivity of tax policies and other related reforms in the region can significantly contribute to preventing further regression in the enjoyment of human rights and lay the groundwork for a green and inclusive recovery. In its 2017 Report "Poverty and Human Rights in the Americas" the Commission noted that human rights principles constitute a framework that underpins the key functions of fiscal policy and taxation. It highlighted the need for a broad redistributive policy framework that goes beyond economic growth, and identified that to achieve a reduction in inequalities, States could, for example, increase the tax burden progressively, review tax deductions, exemptions and loopholes, and combat tax evasion, avoidance and other tax abuses. Subsequently, in the 2018 "Public Policies with a Human Rights Approach" Report, the Commission stated that an adequate fiscal policy can contribute - among other points - to the redistribution of wealth for the reduction of inequality gaps and to the investment necessary for the fulfillment of human rights, in particular economic and social rights.

On the other hand, in the Report on "Business and Human Rights: Inter-American Standards" of 2019, the IACHR and its REDESCA argued that certain tax practices implemented by companies and the scheme of state control exercised over them can generate harmful impacts on the exercise of human rights. Likewise, in Resolution 1/2020 of the IACHR and REDESCA on Pandemics and Human Rights in the Americas, member states were recommended to mobilize the maximum available resources through national fiscal policies and regional coordination to implement the right to health and other ESCER. Finally, Resolution 3/2021 on climate emergency contains an entire chapter on "Fiscal, economic and social policies for a just transition", which shows that fiscal policy is not only crucial to finance rights, but also to protect the environment and to incentivize or discourage behaviors necessary to guarantee ESCER.

In view of the foregoing, the Special Rapporteurship warns that it is necessary to establish a true paradigm shift in fiscal policy, in line with the commitments assumed through the OAS Charter to join efforts for equality of opportunity, the elimination of critical poverty and the equitable distribution of wealth and income, with full participation of its peoples in decisions relating to their own development as components of integral development. Likewise, within the framework of its current Triennial Plan, as well as the current Strategic Agenda 2021-2023 of the IACHR, the Office of the Special Rapporteur incorporates issues related to fiscal policies and human rights as one of its strategic priorities, with the objective of channeling dialogues between economic and human rights actors, strengthening the development of inter-American standards in this area, and supporting the economic recovery of States from a human rights perspective. To this end, the Office of the Special Rapporteurship is at the disposal of the American States, civil society, business and economic actors, as well as academia and all interested parties to cooperate and promote the development of fiscal actions respectful of human rights in the Americas.

In this context, REDESCA welcomes the efforts of Latin American and Caribbean countries to hold the first Latin American Summit for fair, equitable and sustainable global taxation to be held in Cartagena de Indias, Colombia, on July 27-28, 2023. This regional initiative aims to agree on common tax standards to combat illicit financial flows, tax evasion and avoidance and other shared problems, such as growing poverty, inequalities and climate emergency. In addition, under the Secretariat of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), this initiative will serve as a permanent, transparent and inclusive platform for regional tax cooperation.

In the framework of these regional tax negotiations, REDESCA calls on all States to ensure compliance with their obligations to mobilize all available resources to respect, protect and fulfill human rights at the national and extraterritorial levels, generating sufficient resources to finance quality public services that allow for the full enjoyment of human rights and guarantee a just transition.

In particular, REDESCA recommends States to:

• Strengthen coordination mechanisms in global tax negotiations, for example, by supporting discussions toward a UN Tax Convention to deepen multilateral reforms that seek greater equity in the global tax system and a more equitable global governance framework.
• Promote tax progressivity by carrying out tax reforms in Latin American and Caribbean countries to better record wealth and capital income and avoid tax competition.
• Combat tax havens and illicit financial flows including tax evasion and avoidance through "tax havens", as part of its duty to mobilize maximum available resources for the fulfillment of human rights.
• Agree on green taxes by undertaking coordinated fiscal policies on fossil fuels, carbon emissions and specific taxes on extractive industries and transitional minerals.
• Strengthen participation and accountability by promoting public participation in tax-related decision-making processes. This includes encouraging the meaningful participation of civil society organizations, affected communities, and marginalized groups in tax negotiations. Their perspectives and voices must be heard to ensure that tax policies and agreements are inclusive, transparent and accountable.
• Ensure transparency, implementing beneficial ownership registries in all countries, with public access, under homologated standards and without minimum thresholds, as a preliminary step to articulate a regional registry of global assets.
• Promote substantive gender equality through its fiscal policy with an intersectionality perspective, as indispensable approaches to diminish inequality gaps and remove obstacles to the realization of all human rights for all people, without discrimination.

REDESCA is an autonomous office of the IACHR, specially created to strengthen the promotion and protection of economic, social, cultural and environmental rights in the Americas, leading the Commission's efforts in this area.

As principal, autonomous body of the Organization of American States (OAS), the IACHR derives its mandate from the OAS Charter and the American Convention on Human Rights. The Inter-American Commission has a mandate to promote respect for and to defend human rights in the region and acts as a consultative body to the OAS in this area. The Commission is composed of seven independent members who are elected in an individual capacity by the OAS General Assembly and who do not represent their countries of origin or residence.

No. RD160/23

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