Tax Justice Advocacy

138 Pages·2013·2.89 MB·English

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Tax Justice Advocacy:
A Toolkit for Civil Society
(cid:3)
INSIDE COVER
Origins of the toolkit
This toolkit was produced as part of a three-year project ‘Towards Tax Justice: Raising Awareness, Building Capacity, Supporting
International Coordination and Policy Dialogue to Make National and International Tax Systems More Supportive of Development’,
implemented from 2009 to 2011 with funding from the European Commission.*
The toolkit is the result of a collaboration between Christian Aid, SOMO and an international reference group consisting of the Tax
Justice Network (TJN), TJN Africa and Action for Economic Reforms. The first draft was produced by Christian Aid and SOMO and was
reviewed by the reference group. It was later piloted during a two-day workshop held in Manila, the Philippines on 7–8 August 2010,
hosted by Jubilee South/Asia-Pacific Movement on Debt and Development and attended by civil society representatives from Kenya,
Zimbabwe, Vietnam, the Philippines, Indonesia, the Netherlands, France and the United Kingdom. The toolkit was revised following
the feedback from the pilot. Although the toolkit is the outcome of a collaborative process involving all project partners and workshop
participants, any errors or oversights remain the responsibility of the authors.
In 2011 and 2012, an online version of the toolkit will be launched to create an interactive tool that can be revised and improved
according to new findings on tax justice issues. This process will also be part of a global collaborative project.
* ‘Towards Tax Justice’ is coordinated by the Netherlands-based Centre for Research on Multinational Corporations (SOMO) and implemented by a team of partner
organisations from Kenya (Tax Justice Network Africa), Zimbabwe (AFRODAD), Ghana (ISODEC), the Philippines (Action for Economic Reforms and Jubilee South/
Asia-Pacific Movement on Debt and Development), Argentina (Poder Ciudadano) and the United Kingdom (Christian Aid). Christian Aid and SOMO implement the global
aspects of the project and fulfil coordination and research roles. The global Tax Justice Network is closely involved in implementing activities as associate partner.
Acknowledgements
Text: Sally Golding (lead author), Matti Kohonen, Katrin McGauran, David McNair and Sophie Powell
The authors would like to thank the reference group members Sandra Kidwingira (TJN Africa) and Filomeno St. Ana III (Action
for Economic Reforms) for their invaluable input. Thanks are also due to the following people: Helen Collinson, Claire Kumar, Kato
Lambrechts and Mariana Paoli (Christian Aid), Martin Hearson (ActionAid UK), Roelien Knottnerus (SOMO), Maaike Kokke (formerly
SOMO), Michael Ocampo (Action for Economic Reforms) and Søren Kirk Jensen (consultant).
The toolkit was immeasurably improved by the feedback and case studies provided by participants of the Manila pilot workshop
(7–8 August 2010): Lidy Nacpil, Erwin Puhawon and Claire Miranda (Jubilee South/Asia-Pacific Movement on Debt and Development,
the Philippines), Malou Tabios, Christopher Ocampo, Lito Vazquez and Mae Buenaventura (Freedom from Debt Coalition, the
Philippines), Filomeno Sta. Ana III (Action for Economic Reforms, the Philippines), Setyo Budiantoro (Perkumpulan Prakarsa,
Indonesia), Nguyen Thi Bich Diep (Justice Initiative Facility Fund, Vietnam), Daphne Villanueva (Christian Aid, the Philippines),
Fiona Chipunza and Fanwell Bokosi (AFRODAD, Zimbabwe), Attiya Waris (Tax Justice Network), Alvin Mosioma (Tax Justice
Network Africa) and Dereje Alemayehu (Tax Justice Network Africa and Christian Aid, Kenya).
Financed by: the European Commission, Vereniging voor Personele Samenwerking met Ontwikkelingslanden (PSO),
the Dutch Ministry of Foreign Affairs, Christian Aid, ActionAid UK and Norwegian Church Aid
Project coordination: Sophie Powell and Katrin McGauran
Illustration: Jorge Martin
Design: Christian Aid
© Christian Aid and SOMO, January 2011
The content of this publication is the sole responsibility of Christian Aid and SOMO and can under no circumstances be
regarded as reflecting the position of the European Union, the Dutch Ministry of Foreign Affairs, or of the Vereniging voor
Personele Samenwerking met Ontwikkelingslanden (PSO).
BACK FRONT
T
a
x

J
u
s
t
i
c
e
A
d
v
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a
c
y
:
A
T
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l
k
i
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f
o
r

C
i
v
i
l

S
o
c
i
e
t
y
Tax Justice Advocacy:
A Toolkit for Civil Society
(cid:3)
INSIDE COVER
Origins of the toolkit
This toolkit was produced as part of a three-year project ‘Towards Tax Justice: Raising Awareness, Building Capacity, Supporting
International Coordination and Policy Dialogue to Make National and International Tax Systems More Supportive of Development’,
implemented from 2009 to 2011 with funding from the European Commission.*
The toolkit is the result of a collaboration between Christian Aid, SOMO and an international reference group consisting of the Tax
Justice Network (TJN), TJN Africa and Action for Economic Reforms. The first draft was produced by Christian Aid and SOMO and was
reviewed by the reference group. It was later piloted during a two-day workshop held in Manila, the Philippines on 7–8 August 2010,
hosted by Jubilee South/Asia-Pacific Movement on Debt and Development and attended by civil society representatives from Kenya,
Zimbabwe, Vietnam, the Philippines, Indonesia, the Netherlands, France and the United Kingdom. The toolkit was revised following
the feedback from the pilot. Although the toolkit is the outcome of a collaborative process involving all project partners and workshop
participants, any errors or oversights remain the responsibility of the authors.
In 2011 and 2012, an online version of the toolkit will be launched to create an interactive tool that can be revised and improved
according to new findings on tax justice issues. This process will also be part of a global collaborative project.
* ‘Towards Tax Justice’ is coordinated by the Netherlands-based Centre for Research on Multinational Corporations (SOMO) and implemented by a team of partner
organisations from Kenya (Tax Justice Network Africa), Zimbabwe (AFRODAD), Ghana (ISODEC), the Philippines (Action for Economic Reforms and Jubilee South/
Asia-Pacific Movement on Debt and Development), Argentina (Poder Ciudadano) and the United Kingdom (Christian Aid). Christian Aid and SOMO implement the global
aspects of the project and fulfil coordination and research roles. The global Tax Justice Network is closely involved in implementing activities as associate partner.
Acknowledgements
Text: Sally Golding (lead author), Matti Kohonen, Katrin McGauran, David McNair and Sophie Powell
The authors would like to thank the reference group members Sandra Kidwingira (TJN Africa) and Filomeno St. Ana III (Action
for Economic Reforms) for their invaluable input. Thanks are also due to the following people: Helen Collinson, Claire Kumar, Kato
Lambrechts and Mariana Paoli (Christian Aid), Martin Hearson (ActionAid UK), Roelien Knottnerus (SOMO), Maaike Kokke (formerly
SOMO), Michael Ocampo (Action for Economic Reforms) and Søren Kirk Jensen (consultant).
The toolkit was immeasurably improved by the feedback and case studies provided by participants of the Manila pilot workshop
(7–8 August 2010): Lidy Nacpil, Erwin Puhawon and Claire Miranda (Jubilee South/Asia-Pacific Movement on Debt and Development,
the Philippines), Malou Tabios, Christopher Ocampo, Lito Vazquez and Mae Buenaventura (Freedom from Debt Coalition, the
Philippines), Filomeno Sta. Ana III (Action for Economic Reforms, the Philippines), Setyo Budiantoro (Perkumpulan Prakarsa,
Indonesia), Nguyen Thi Bich Diep (Justice Initiative Facility Fund, Vietnam), Daphne Villanueva (Christian Aid, the Philippines),
Fiona Chipunza and Fanwell Bokosi (AFRODAD, Zimbabwe), Attiya Waris (Tax Justice Network), Alvin Mosioma (Tax Justice
Network Africa) and Dereje Alemayehu (Tax Justice Network Africa and Christian Aid, Kenya).
Financed by: the European Commission, Vereniging voor Personele Samenwerking met Ontwikkelingslanden (PSO),
the Dutch Ministry of Foreign Affairs, Christian Aid, ActionAid UK and Norwegian Church Aid
Project coordination: Sophie Powell and Katrin McGauran
Illustration: Jorge Martin
Design: Christian Aid
© Christian Aid and SOMO, January 2011
The content of this publication is the sole responsibility of Christian Aid and SOMO and can under no circumstances be
regarded as reflecting the position of the European Union, the Dutch Ministry of Foreign Affairs, or of the Vereniging voor
Personele Samenwerking met Ontwikkelingslanden (PSO).
1 Tax Advocacy Toolkit
Introducing the tax advocacy toolkit
‘Taxation is not an exclusive domain of economic planners and administrators. It is more
importantly the concern of the people. The people should be involved in the process of deciding
what to tax, whom to tax, and how to tax, as well as in collecting and spending tax revenues.’
Citizens’ Review of the Tax System, the Philippines, 1994
‘[We] recognise the common threat to political progress, economic development and to poverty
eradication that results from the unacceptable domestic and international obstacles to effective
taxation for development… [and] commit to work together for reform in the areas of domestic
taxation, revenues from natural resource extraction and international taxation.’
Nairobi Declaration on Tax and Development, March 2010
While some pioneering civil society groups America. There have been some great
have long been campaigning for fairer tax successes, many of which are documented
systems, the critical role of tax in achieving in this toolkit. But there’s a need for many
development and social justice has often been more organisations to take on tax justice if
neglected by civil society in the North and the real, long-lasting progress is to be made on
South. For many, tax is a complex topic, best the issues outlined above.
left to ‘experts’. But this need not be the case.
This publication is designed to introduce you
Tax may appear technical, but it is an issue too to key tax topics of relevance to civil society
critical to bypass. Fair and effective tax collection organisations in simple terms, in order to break
is essential for raising the revenue to deliver down the complexity of the issue. We hope the
services that citizens need. It is a powerful tool stories of tax justice campaigns around the world
for redistributing wealth within society to address will inspire you to action. In addition, we provide
poverty and inequality. And tax is the glue that detailed guidance, tips and tools on how to go
builds accountability of governments to their citizens. about developing an advocacy strategy on tax;
conduct tax-focused research; and lobby,
For these reasons, engaging with tax policy communicate and campaign on tax.
is increasingly considered essential for the
achievement of the wider aims of many The toolkit is not intended to be read from
organisations. Whether you are working cover to cover in one sitting. It is designed to
on issues of poverty and social exclusion; allow you to dip in and read the sections that
access to essential services; aid, debt or trade; are most relevant to your level of experience
governance and accountability; or the impacts and knowledge, your interests and your context.
of mining or other foreign investors on local We hope there’s some useful material here for
communities, there are strong reasons for you everyone and that it inspires you to take forward,
to consider integrating advocacy on tax justice or start, your tax justice advocacy. Around the
into your strategies. Many have already done so. world, organisations and networks are demanding
tax justice in growing numbers. Together we can
In recent years, new tax justice networks create a sea change in tax policy that genuinely
have emerged, or long-standing coalitions benefits those living in poverty and creates a
have expanded their reach, across Africa, more equitable distribution of resources, North
Latin America, Asia, Europe and North and South.
2 Tax Advocacy Toolkit
About this toolkit
Why this toolkit?
The purpose of this toolkit is to strengthen
the capacity of civil society organisations to:
(cid:88) understand and analyse the issues surrounding
tax in a given country
(cid:88) develop advocacy strategies for tax justice
(cid:88) do tax research
(cid:88) plan and undertake different advocacy activities
(for example lobbying, campaigning and media
work)
(cid:88) learn from the experiences of others already
doing tax advocacy.
How to use the toolkit
Each chapter forms its own building block.
You can work through the toolkit chapter
by chapter – or select those chapters that
interest you most.
In every chapter, you will find:
(cid:88) information – either on different aspects
of the tax issue or on how to develop
the skills needed for tax advocacy
(cid:88) case studies from different countries
(cid:88) practical tools for learning and analysis
on tax within your group or organisation
(cid:88) interaction pages containing ideas for group
exercises in a workshop or training setting.
3 Tax Advocacy Toolkit
Contents
Chapter 1: Why bother with tax?
Why tax matters 2
How countries are deprived of tax revenues 10
Interaction page 17
References 18
Chapter 2: How to develop your
tax advocacy strategy
Setting out an advocacy cycle 2
Step 1: Identifying the problem and its root 3
causes and finding a solution
Step 2: Assessing your external context 8
Step 3: Setting your tax goals, objectives and 14
indicators
Step 4: Developing your key messages 18
Step 5: Deciding on your advocacy approach 21
Step 6: Planning your monitoring and 22
evaluation
Appendix 1: Advocacy strategy template 24
Appendix 2: Stakeholder mapping table 25
Interaction pages 28
References 32
Chapter 3: Doing your tax research
Research and the advocacy cycle 2
Researching government tax policy 3
Researching the tax contribution of companies 12
Appendix 1: An example terms of reference for 22
tax research
Appendix 2: The ‘poor person’s tax burden’ 24
survey
Interaction pages 27
References 30
Chapter 4: Getting active on tax
Tax advocacy activities 2
Awareness-raising 3
Lobbying 4
Media – expanding your reach 10
Campaigning – popularising your tax advocacy 19
Engaging with corporates 27
Linking up – networks and coalitions 33
Interaction pages 34
References 40
Tax resources and glossary
NGO reports on tax 1
Networks and organisations working on tax 2
Some useful websites on tax 2
Glossary 3
Chapter 1: Why bother with tax? 1
Chapter 1:
Why bother with tax?
2 Tax Justice Advocacy: A Toolkit for Civil Society
Contents

Why tax matters 2
Revenue: funding to deliver the services citizens need 2
Redistribution: to address poverty and inequality 4
Representation: building accountability of governments to 6
citizens and reclaiming policy space
Repricing: limiting public ‘bads’; encouraging public ‘goods’ 9
How countries are deprived of tax revenues 10
Domestic constraints 10
External influence on tax policy 11
Financial secrecy leading to tax evasion and avoidance 14
Interaction page 17
References 18
Chapter 1: Why bother with tax? 1
Chapter 1: Why bother with tax?
The link between taxation and development is fundamental. A functioning
state that can meet the basic needs of its citizens must rely ultimately on
its own revenues to meet development objectives. Using the tax system,
the state can mobilise domestic resources, redistribute wealth and
provide essential services and infrastructure. Effective tax structures can
also create incentives to improve governance, strengthening channels of
political representation and reducing corruption.
However, governments across the world struggle to collect enough taxes
to fund essential services in a fair way. Southern governments in particular
face serious challenges as a result of weak and under-resourced revenue
authorities, large informal sectors, pressure to offer overly generous tax
breaks, and the exploitation of tax loopholes by unscrupulous companies
and rich individuals. Too often tax systems are heavily skewed against the
interests of the poorest.
This chapter provides:
(cid:102) an introduction to tax justice issues, with explanations and definitions of key tax terms
(cid:102) an overview of why tax matters for economic and social justice; and of the ways in which
governments are often deprived of vital tax revenues
(cid:102) case study examples to illustrate the range of campaigning by citizens and organisations across the
world for fairer tax systems, for tax justice. These examples show that – whether you are working
on poverty and social exclusion; access to essential services; aid, debt or trade; governance and
accountability; or the impacts of mining or other foreign investment on local communities –
advocacy on tax justice can help you achieve your objectives.
The chapter ends with an interaction page which suggests an exercise to facilitate a group discussion
on the main themes raised in this chapter.
2 Tax Justice Advocacy: A Toolkit for Civil Society
Why tax matters
It is often assumed that tax is a bad thing: that governments want to deprive citizens of their hard-earned money. But from an
economic justice and human rights perspective, taxes are crucial for four reasons, which can be summarised as the four ‘Rs’:
(cid:102) Revenue: funding to deliver the services citizens need
(cid:102) Redistribution: to address poverty and inequality
(cid:102) Representation: building accountability of governments to citizens and reclaiming policy space
(cid:102) Repricing: limiting public ‘bads’; encouraging public ‘goods’.
Below we explain the importance of each in turn and their links to economic and social justice issues.
‘Taxation funds the Revenue: funding to deliver revenues from the tax would be used for.
lion’s share of the the services citizens need Subsequently the level of VAT was raised to
12.5 per cent, with the revenue from the added
education budget,
Tax is a vital source of revenue for most 2.5 per cent ring-fenced for education through the
particularly the governments enabling them to fund essential Ghana Education Trust Fund. With education being
salaries of teachers, services and infrastructure for their citizens. Of key to everybody, it caught on well.2
and so requires course, revenues will not automatically be used
for such social goods. But when governments get ActionAid has stressed that ‘governments prefer
more attention if
revenue from tax, citizens are in a far stronger to use tax revenue, rather than aid or loans, to
countries are to
position to exert pressure that it be spent on the cover the salaries of teachers, because it is
meet the Education
services to which they are entitled. relatively secure and predictable. They do not
for All Objectives want to hire teachers with aid money and then
by 2015.’ Taking education as an example, in 1995 the find they cannot pay the salaries two or three
Ghanaian government introduced a new value years later, as making teachers redundant is
ActionAid and added tax (VAT) of 17.5 per cent, which initially politically very sensitive. So, the best way to get
Education led to widespread protests. The government more money for more teachers is to expand the
International, 20091 was forced to revoke the policy and in 1997 VAT national tax base.’3 When aid contributions have
was introduced at 10 per cent, accompanied enabled governments to improve provision of
by an intensive government campaign to create services, domestically raised revenue tends to
awareness among citizens about what the also be an important factor. In Kenya the
CASE STUDY Tax justice leads to improved social services in Bolivia4
Bolivia’s oil and gas industry is the most dynamic sector of the Bolivian economy and receives by far the
most foreign investment. However, Bolivia has struggled to benefit from its vast underground wealth since
the sector was privatised in 1996 as part of its structural adjustment reforms. With privatisation, the royalties
for the vast majority of companies were lowered from 50 per cent to only 18 per cent. There was great
national concern over the reform. Research showed that the government was capturing less and less
revenue from the sector (37 per cent of the turnover in 1999 was reduced to 27 per cent in 2004), in a
context of huge increases in investment, production and exports with corresponding increasing prices.
Civil society organisations such as the Centre for Labour and Agricultural Development (CEDLA) took the
lead in researching and educating the population about the impact of the reforms, which contributed to
popular discontent and a series of mobilisations and protests led by indigenous groups. As a result of
the pressure, the Bolivian Congress finally passed a law in May 2005 which provided – among other
things – for a new royalties and tax structure on oil and gas extraction. All reserves became subject to
the 18 per cent royalty rate, as well as to a new direct tax of 32 per cent on the value of all oil and gas
production. The reforms to the sector since 2005 have generated a huge increase in revenue for the Bolivian
government (from an income of around US$173 million in 2002 to an estimated US$1.57 billion in 2007).
As a result, the Morales government has increased spending on social programmes. Three major cash
transfer programmes have been developed: an expansion of public pensions to relieve extreme poverty
among the elderly; a grant for poor families to increase primary school enrolment; and, most recently,
a grant for uninsured new mothers as an incentive for them to seek medical care during and after their
pregnancies, in order to reduce maternal and infant mortality. School breakfasts are also provided for
primary school children to guarantee all school children at least one meal a day. None of these programmes
would have been possible without the reforms to oil and gas taxation.
Chapter 1: Why bother with tax? 3
declaration of free primary education in 2005 the case for this spending to take place.
led to the realisation by the state of the need Addressing high maternal and infant mortality
to improve fiscal resources to maintain the rates, successfully tackling HIV, reducing the
president’s electoral promise. This, together blight of malaria and other tropical diseases all
with other societal needs, has led to increased require reliable long-term funding from
tax targets and collection in order to improve governments. Of course, financing through
education and other services.5 taxation is not the only factor that will drive the
provision of such services. Other factors such as
What is true of education is true of many other political will are crucial. But tax is an important
services that rely on government support and part of the solution. For this reason, citizens in
funding. Millions of small farmers in southern many countries have sought to influence tax
countries rely on governments to provide training, policies in order to get the services to which they
research and credit and to develop markets for are entitled.
inputs and outputs; yet governments in Africa
tend to spend far too little in this area, and donor So, if you are campaigning for the provision or
support to agriculture has been woefully improvement of education, health or other
inadequate over recent decades. Increased services, engaging in tax issues should be a
earnings from domestic tax would enable central part of your efforts.
governments to provide more of these services or
at least provide citizens with the scope to argue
Tax and human rights
Every government in the world has certain responsibilities regarding its citizens. The human rights legal
framework spells out those responsibilities.
However, human rights encompass not just social and political rights, but also economic and social
rights. The minimum requirements for the fulfilment of economic and social rights include the provision
of available foodstuffs for the population, essential primary healthcare, basic shelter and housing, and
the most basic forms of education.
Groups working on human rights should be concerned about how rights are realised through the budget,
and how they are violated when states are unable to meet their obligations through weak or unfair
taxation.
In 1986 the United Nations made explicit the link between this right and the resources required to fund
it. More recently the millennium development goals (MDGs) are an attempt to create a practical
benchmark for states to work towards implementing human rights.
MDG campaigners often focus on pushing countries to fulfil their aid pledges, aimed at meeting the
MDGs. While this is important, there is an increasing recognition that the progressive realisation of
rights, in the long term, requires domestic resource mobilisation through tax. Indeed, a recent analysis
by the Tax Justice Network showed a strong relationship between African countries with high levels of
tax collection and those making progress with regard to the MDGs.6
Are resources being mobilised to ensure that governments fulfil their responsibilities towards the
progressive realisation of rights? If not, a government may be failing in its human rights obligations
and may be held to account for doing so.