This Monday, March 6 at 2:15 pm Los Angeles time, our Initiative will participate in the 186th Session of the Commission, requesting a series of crucial measures to maintain the connections between these two issues in the region.

From March 6-10 in Los Angeles, California, the Inter-American Commission on Human Rights (IACHR) will hold its #186th Session. During the first day of this important event, the organizations that are part of our Initiative will hold a thematic hearing on Fiscal Policy and the Guarantee of Economic, Social, Cultural and Environmental Rights (ESCR) in the region.

The session, which will take place at the University of California at 2:15 pm (Los Angeles time), is of utmost relevance, as it will show evidence of the centrality of fiscal policy for the guarantee of human rights, will recall the fiscal tools that States have to advance the guarantee of ESCR, will demonstrate the progress that the region has made in this area, and will ask the IACHR to adopt concrete measures to facilitate such progress.

For our Initiative, the measures should be focused on the adoption of a thematic resolution on fiscal policy and human rights that promotes the operationalization of our Human Rights Principles on Fiscal Policy in the framework of the Inter-American System, which makes concrete recommendations for States to adopt fiscal policies aligned with their human rights obligations, and that provides an inter-American reading of the Principles, with a view to the production of a possible thematic report on these issues.

The key role of the Inter-American System

This is based on several premises: that without adequate public resources, the material fulfillment of rights would be impossible; that fiscal policy is key to closing the gaps between individuals and groups and to incentivizing or discouraging behaviors that are necessary to ensure the guarantee of ESCR (such as taxes on sugary drinks about the right to health); and that fiscal policy is also linked to the strengthening of democracy and the fight against corruption, which confirms its importance for all human rights.

Thus, the organizations that are part of our Initiative insist that considering fiscal policy is relevant to implement decisions of the Inter-American System. The IACHR has identified the lack of economic resources as one of the most important challenges for States to implement its decisions. Likewise, the lack of financial capacity of the States is understood by the Commission as an obstacle to the fulfillment of compensation measures for victims, rehabilitation measures and truth and justice measures.

For these reasons, our Initiative values the progress made by the Inter-American System in connecting fiscal policy and human rights. Many of these advances have been led by the current Special Rapporteur for Economic, Social, Cultural and Environmental Rights (REDESCA), Soledad García Muñoz, whose work has been central in this area. 

However, we find that the region is still missing out on the enormous potential of public finances to make decisive progress in the materialization of its normative commitments at the Inter-American level in the area of human rights.

For example, in the region, there is still poor coordination between Ministries of Finance and state agencies with competence in the area of human rights, while it is estimated that tax collection about average GDP for Latin America is far below the estimate for OECD countries (21.9% for the former, compared to 33.5% for the latter). The regressive nature of the region's tax systems must be added to this problem of insufficient resources, which explains why the poorest sectors bear a proportionally greater burden.

In short, under these conditions, most fiscal policies in Latin America do not facilitate public investment that would enable the progressive and egalitarian realization of ESCR, and prevent the States from moving with the speed required by the current crises, such as the one generated by the HIV/AIDS pandemic, the increase in the cost of living or the climate emergency.

This situation results in a systematic violation of the obligations imposed by the Inter-American Human Rights System on States Parties, such as the obligation to guarantee the exercise of all rights in conditions of real equality for all persons and to adopt, to the maximum available resources, all measures necessary to that end.

A favorable scenario for the hearing

In 2023, there will be new and unique opportunities to have clear and consolidated inter-American standards that will allow us to capitalize on the Commission's legacy in this area and have the IACHR as a natural reference for the protection and promotion of human rights in the region.

We highlight, for example, the historic resolution issued by the UN General Assembly in November 2022, which recognized the importance of strengthening international tax cooperation between States and requested the preparation of a report with the next steps to achieve it. Then, there is also the call by the government of Colombia to hold the first Latin American Summit for global, inclusive, sustainable and equitable taxation, which, in our concept, will allow mobilizing the maximum available resources to finance the economic, social, cultural and environmental rights recognized by the American and international instruments.

How to watch the hearing?

If you want to find out what happens during this hearing, you can follow the broadcast on the IACHR website and the minute-by-minute updates on our Twitter account.   

About our Initiative

The Initiative for Human Rights Principles in Fiscal Policy is made up of eight organizations working in Latin America and the Caribbean, including ACIJ, CELS, CESR, Dejusticia, Fundar, Inesc, Red de Justicia Fiscal and GI-ESCR. Collectively, we seek to develop and promote a compendium of principles and guidelines that synthesize human rights standards applicable to tax policy.

About our Principles

The Principles for Human Rights in Tax Policy demonstrate the wealth of existing standards that connect tax policy and human rights, and the importance of applying those standards to achieve meaningful progress in the realization of rights, especially for certain groups. Thus, among other things, they point out concrete measures that can be taken to eliminate gender discrimination and promote substantive gender equality; indicate the need to allocate sufficient resources for historical reparations for indigenous and Afro-descendant populations; and indicate concrete steps to assess the fairness and transparency of tax benefits in line with human rights commitments. The Principles also guide what constitutes fair taxation and fair budgeting. In addition, they detail the fiscal reading of enhanced ESCR obligations, such as the use of maximum available resources, progressive realization, or guarantee of essential levels of rights.

Eight months after the Russian invasion and amid a global inflationary crisis, we spoke with Alejandro Rodriguez, Head of Advocacy at ICRICT (Independent Commission for the Reform of International Corporate Taxation), about how the economic impacts of that conflict have the potential to affect Human Rights, including Latin America and the Caribbean. Here are some of the ideas that came out of the dialogue.

1. The conflict between Russia and Ukraine has repercussions on poverty and inequality, including in Latin America.

Because of the globalized world in which we live, everything and everyone is interconnected. Let us start with the fact that Western countries imposed economic sanctions on Russia that increased the prices of oil and natural gas for the rest of Europe, which is highly dependent on imports of these products. Consequently, energy prices on that continent raised, which meant a rise in the cost of goods that Europe provided to the Global South. The war caused Ukraine, one of the world's major producers of fertilizers—such as urea— to stop producing in the quantities it used to. The consequence? Food, which needs immense amounts of them to mass-produce it, also went up in price, deepening poverty and inequality. For the moment, this is one of the impacts of the conflict in Latin America and the Caribbean, as the lowest-income households are the most affected.

2. As a result of price increases, inflation may affect rights

While the conflict has led to the reconfiguration of budgets in countries such as Germany, where military spending doubled for the first time in decades, inflation forced Latin American and Caribbean countries to increase central bank interest rates as a recipe for fighting inflation. This prescription implies a downturn in the economy (which many economists may call a recession) and may lead states to make austerity decisions —with less spending for sectors related to economic, social, and cultural rights, such as public services. Such decisions are contrary to the first principle of the Human Rights in Fiscal Policy Initiative: Human Rights enforcement must be a fundamental objective of fiscal policy. At the same time, these global shocks are generating an economic decline in many countries, which means lower tax revenues for the welfare and guarantee of the rights of populations.

3. Latin American and Caribbean states face a new fiscal challenge

States have to implement public spending measures to soften the blows of inflation, but this requires more resources. This option is not so easy, as the countries of Latin America and the Caribbean are already heavily indebted to deal with the effects of the COVID-19 pandemic, and they have a limited financing capacity.

4. But governments are called upon to look at new sources of funding that would allow them to avoid austerity policies.

Wealth taxes, for example, are a fundamental measure that states should contemplate to help respond to the crisis without the need to enter into austerity measures, which have been shown to affect poverty and inequality. But there are measures other than the wealth tax, such as a model of fair taxation of multinationals, with a global minimum rate that would make these companies pay a corporate income tax of at least 21% or 25% in the places where they carry their activities. That would bring a lot of resources to countries who are not receiving resources from multinationals because they divert their profits to jurisdictions that are tax havens or have very low or zero corporate tax rates. This idea makes sense from Principle #14 of the Human Rights in Tax Policy Initiative: non-state actors, including corporations and intermediaries, have Human Rights responsibilities concerning their tax behavior.

5. The Russia-Ukraine conflict has put fiscal challenges. But has also opened an opportunity for transparency measures

The package of sanctions by Western countries on Russia is one way to put pressure on the Putin government. However, the pressure would increase if, among other measures, the assets in tax havens of oligarchs close to the president could be frozen or confiscated. This goes against Principle number 7 of the Human Rights in Tax Policy Initiative, which refers to the need for transparency in these matters. According to data from the European Tax Observatory, the wealth of Russian millionaires outside Russia is equivalent to 85% of Russia's national income. The problem is that it is unknown where it is, and there are no ways to confiscate such assets.