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Advancing Tax Justice through Human Rights
International Strategy Meeting
April 29-30, 2015 | Lima, Peru
Session 4.A. Human rights duties beyond borders to combat illicit financial
flows and cross-border tax abuse
Facilitator: Niko Lusiani, CESR
Commentators:
• Sorley McCaughey, Christian Aid Ireland
• Juan Diego Gomez, PSI
• Sergio Chaparro, DeJusticia
Background
Individuals and business enterprises who evade and avoid taxes create an endemic drain on the
availability of revenues for the progressive realization of economic and social rights, especially in
countries with already high levels of inequality and low levels of tax. Further, tax evasion corrodes
the responsiveness, answerability and representative nature and capacity of government institutions,
undermining human rights accountability in innumerable ways. Cross-border tax abuse, of course,
does not happen in a vacuum. Among the most important external factors is the availability of
offshore financial centers and secrecy jurisdictions. Many countries promote and actively encourage
high-net worth individuals and multinational companies to use their laws and territories to shield tax
liabilities in source countries. This conduct directly interferes, and significantly undermines, other
countries’ abilities to mobilize the maximum available resources for economic and social rights.
Those States thus complicit in tax abuses undermine governments’ ability to finance expenditures
and conduct progressive and equitable fiscal policy. By eroding other states’ capacities to exercise
sovereignty in taxing legal and natural persons in its jurisdiction, tax evaders and the countries which
allow them to conceal their assets also destabilize the transparency, participation and accountability
of public institutions. As the UN Special Rapporteur on Extreme Poverty and Human Rights stated,
“actions or omissions that diminish public revenues by allowing large-scale tax evasion or tax
structures that have a disproportionate impact on the poorest segments of the population could
constitute violations of human rights obligations.”
Under international law, States are the central and primary duty bearer for upholding human rights
within their territory. Nevertheless, no state is an island in today’s globalized reality. One country’s
domestic tax policies have immediate cross-border impacts and shape the ability of other countries
to meet human rights commitments. The relevance and application of human rights obligations, in
this sense, do not cease at territorial borders. As discussed in IBAHRI’s report “Tax abuses, poverty
and human rights,” the UN Charter, various international and regional treaties, legal jurisprudence,
authoritative interpretation, the Maastricht Principles on Extraterritorial Obligation of States in the
area of Economic, Social and Cultural Rights and some budding state practice stipulate that
international human rights law implies standing duties on governments to respect, protect and
support the fulfillment of economic, social and cultural rights outside of the country’s territory.
These duties of states to cooperate in the realization of human rights beyond their borders can
provide a useful counterpoint to the notion of ‘tax sovereignty’ which has hampered effective action
against the transnational impacts of tax evasion and harmful tax competition.
This session will explore how the human rights norms of an extraterritorial nature can help combat
cross-border tax abuse. We will discuss practical examples of this type of advocacy in action and
explore different accountability avenues in the near future. We will also explore some concrete tools
to operationalize these extraterritorial obligations related to tax. Existing research and advocacy
challenges and gaps will also be identified, and opportunities for overcoming them discussed.
Framing questions:
•
What value do human rights norms of an extraterritorial nature have in combating crossborder tax abuse?
•
Share some practical examples of this type of advocacy in action. What are some particularly
appealing accountability avenues to target in the near future?
•
What are some concrete tools to operationalize these extraterritorial obligations as related to
tax (e.g. spillover impact assessments)? What promise do they hold? What challenges
remain?
•
What political, legal and other challenges do we face in operationalizing extraterritorial
obligations as related to tax?
•
What are the most important research and advocacy gaps in this field at present? How can
we collaborate to overcome them?