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Making tax work for women's rights

Added 08 Mar 2019

Today, March 8th, marks International Women’s Day and the launch of the Global Days of Action on Tax Justice for Women’s Rights, coordinated by the Global Alliance for Tax Justice. News headlines will rightly focus on the oppression, discrimination and systemic inequalities faced by women, but one point that is often overlooked is the many ways in which the tax system, like other policies and structures, offers a transformative tool for redistribution and financing gender equity.

However, the tax system’s transformative power is consistently undermined by current tax laws and practices, and these in turn perpetuate and exacerbate the inequalities faced by women. Large scale tax avoidance and evasion by multinational companies and wealthy individuals continue to deprive governments of revenue, which is desperately needed to fund quality gender-responsive public services for women and girls. Moreover, for many women – especially those living in poverty – regressive and discriminatory tax policies represent an added burden.

When tax revenues are progressively collected, they offer a predictable and sustainable source of income for governments to finance women’s rights and other priorities of the Sustainable Development Goals, including eradicating poverty, reducing inequality and addressing climate change. The good news is that there is growing international awareness of the importance of tax justice for women’s rights and the many and complex impacts our tax systems have on women’s equity.

Going, going, gone: How revenue losses hurt women

Women depend on public services to a greater extent, due to the inequality they experience, the resulting care burden they bear, as well as the needs arising from pregnancy and childbirth. When governments fail to provide adequate care services, this often results in women stepping in to care for children, older people and their family’s health. Right now, it’s estimated that women spend 2.5 times more time on unpaid care and domestic work than men, drastically limiting the time they have available to pursue education and employment.

We know women have been hit harder by austerity and a lack of funding is a common excuse for providing the change that women need worldwide. Yet, our best estimates suggest that governments worldwide lose a staggering US$500 billion annually due to corporate tax avoidance, with conservative estimates suggesting $70-120 billion lost from developing countries. When companies avoid tax, they deprive governments of revenue to fund public services like subsidised childcare, quality healthcare and education. These are essential for women’s equality. Taking concrete actions to address these huge revenue losses is a key step towards tackling inequalities faced by women and girls.

Women’s exclusion and transparency

At the outset of any discussion of women’s rights, it is essential to recognise women’s under-representation in decision-making.  The barriers women experience in progressing to decision-making levels in the public and private sectors mean women are typically under-represented as, for example, policy makers and at senior level in large companies.

Women’s limited access to board rooms and high-level offices also have direct implications for their ability to access important information about the impacts of our tax systems, since a lot of this information is secret. This for example includes information about where multinational corporations are doing business, and how much tax they are paying in each country where they operate. Currently, European Union is considering a proposal to make this information public – so-called “public country by country reporting”. This proposal is vital to ensuring that everybody will get access to information which we need to assess the fairness of our tax system.

Racing to the bottom: Shifting the tax burden

Despite the promises to make multinational corporations pay their share of tax, the world’s governments have become locked in a very costly and destructive ‘race to the bottom’ on corporate taxation. One government’s decision to cut taxes for corporations leads others to follow suit, and if the current trend continues, the global average corporate tax rate will hit zero per cent in 2052..

While corporations are being asked to pay less, regressive tax policies like consumption taxes have been used to fill the gap from the missing corporate tax income. For example, the use of value-added taxes (VAT) have increased starkly. VAT is considered a regressive tax, because it applies the same rate to everyone, regardless of their income, wealth or employment status. This means a wealthy businessman and a poor woman pay the exact same VAT on products like infant formula. To put this in context, women continue to face barriers entering the labour-force, and globally are estimated to earn 77% of what men earn, while paying the same VAT. Many studies have also raised concerns about the impact of VAT on women-lead businesses, in the context of poverty (see for example the Global Tax Justice, ActionAid and the International Development Research Centre reports).

Tax justice for women’s rights

The good news is that there is growing international awareness of the importance of tax justice for women’s rights and the many and complex impacts our tax systems have on women’s equity. For example, in January 2019, the European Parliament adopted a new Gender Equality and Taxation Policies report. It recognises the interconnectedness of the struggles for gender equity and tax justice, and the need for European governments and the European Commission to take concrete action to introduce transparency through public country by country reporting, support tax reform at the global level, and undertake regular gender audits on all fiscal policies.

Tax is a key building block of societies. It is one of the most powerful tools we have to reduce the inequality gap between rich and poor – inside a country and between countries - and between men and women. Equally, taxes are the most sustainable source of government revenue to pay for the public services that societies rely on. Governments now need to end put and to large-scale international tax dodging, introduce transparency and tax justice, and invest in quality gender-responsive public services and fulfilling women’s rights.