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Take any global measure, and in all likelihood it will point towards the same fact: women are disadvantaged relative to men. Women do much greater amounts of unpaid care – caring for children and the elderly, fetching water and household chores – across the world, all of which provide crucial support for economies to thrive. Women’s unpaid care work is conservatively valued at 13 per cent of global GDP. Women are frequently not paid equally for work of equal value, and are increasingly employed for precarious, informal work. One of every three women experiences violence in their life. The situation is more difficult for women living in poverty who face discrimination based on intersectional facets of their identity such as ethnicity, marital status, migrant status, race, etc.

National governments are responsible for ensuring that women realise their human rights and that gender inequality is addressed. One of the key ways to do that is provision of more and better quality public services; for instance, providing shelters will reduce violence against women and provision of piped water will help address the need for frequent trips to fetch water.

International conventions guarantee equal rights for women, and reiterate the duty of states to end discrimination against women. The Sustainable Development Goals (SDGs), the world’s development agenda for 2030, committed to ‘achieve gender equality and empower all women and girls’, ‘give women equal rights to economic resources’, and ‘recognise and value unpaid care and domestic work through the provision of public services’.

Financing public services would depend a great deal on tax policy. Tax is the largest and most sustainable source of government revenue. However, inequities in how and from whom taxes are raised can be antithetical to the realisation of human rights for women and girls and reducing gender inequality. Different methods of raising taxes have diverse distributional effects. The tax mix – broadly composed of direct and indirect taxes – that a state chooses to adopt has substantial gender implications. Direct taxes on personal and corporate income, wealth, property and inheritance are progressive as such taxes reflect the taxpayer’s ability to pay. On the other hand, indirect taxes such as the Value Added Tax, levied on consumption of goods and services are regressive in nature, as they are applicable to both rich and poor consumers. The overall direct tax rates in Asia at a regional scale are among some of the lowest in the world with high levels of dependence on indirect taxes. This hurts the poor as the proportion of one’s income going towards indirect taxes tends to be higher at lower levels of income, as well as impacts women as they tend to spend more on household items which attract consumption taxes.

Direct taxes on income (both personal and corporate), wealth and inheritance are significantly under-utilised and under-enforced, especially in developing countries, thus letting owners of wealth and assets escape taxation. This primarily benefits men, as they tend to own and control more such resources. Developing countries also collect lower levels of corporate income taxes (CIT). IMF data shows that CIT rates have declined in both developed and developing countries by 15-20 per cent in the past three decades. CIT paid by multi-national corporations (MNCs) account for only 10 per cent of government revenue in developing countries – and these very countries are reliant on CIT to fund public services. Additionally, developing countries are often pressured into giving tax exemptions and tax holidays to big businesses and MNCs, in the hope of creating a conducive climate for attracting foreign investment. Studies by the World Bank, IMF and the OECD have suggested that such tax breaks do not necessarily encourage foreign investment. Estimates suggest that corporate tax incentives cost developing countries $138 billion in revenue annually. This shifts the tax burden to lower income groups, where women are over-represented, while simultaneously results in impeded resource mobilisation, public expenditure cuts and increased privatisation of public services.

MNCs and the ultra-rich are also able to avoid paying their fair share of taxes using tax havens or secrecy jurisdictions – cities or countries that have very low tax rates and offer a discrete lid of secrecy on offshore wealth. Using an efficient industry of bankers, tax lawyers and accountants, the rich can shift their wealth to tax havens, while MNCs shift their profits to their subsidiaries located in secrecy jurisdictions through fraudulent trade practices. The price developing countries pay for tax dodging by MNCs varies between $500-600 billion annually. This is possible because the architecture of international financial institutions, that design the norms of international taxation, is highly skewed in the favour of rich, developed nations that benefit from the existence of tax havens. Developing countries, often due to capacity constraints, are unable to address loss of revenue due to dodgy trade practices. These countries instead propose consumption taxes as well as taxes on domestic small businesses to increase revenue – thus resulting in regressive tax systems. In the absence of strong labour laws, women disproportionately receive lower wages as small companies cut costs to pay their tax bills.

Fiscal policy is central to realising human rights for women and girls. A gendered analysis and reform of national tax policies is crucial, such that taxation is based on the principles of equality and non-discrimination. Increased taxation of the rich and powerful (through a combination of personal and corporation income tax, wealth and property tax, higher taxes on luxury goods) and lowering of consumption taxes will result in a progressive tax system. Countries should also invest in increasing capacity in their tax departments, to establish efficient and effective tax collection. Regional cooperation among countries can help address tax competition at a regional level, thus helping reduce the revenue lost to corporate tax giveaways. Developing countries should also keep pushing for their demand to establish a democratic tax forum under the auspices of the United Nations, which would put developed and developing countries at an equal footing to design the norms of international taxation that affect them directly. States’ obligations to meet human rights obligations and SDG targets on gender, poverty and inequality needs to start with focused investment in quality and accessible public services, financed through progressive, gender-responsive tax systems.

 

The views expressed in this piece are those of the author, and do not necessarily reflect the position of CBGA. You can reach Neeti Biyani at neeti@cbgaindia.org.