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III.  Specific obligations applicable to fiscal policy (8-12)

 

08

States must adopt all the necessary financial and fiscal measures to realize human rights, within a sustainable fiscal framework

States must:

8.1. Establish laws and policies, and adopt fiscal frameworks, tax systems, budgets and appropriate debt management policies to ensure the full realization of human rights. Although different types of measures can be adopted, States must be able to justify why their fiscal policy measures should be considered appropriate in light of available evidence.

8.2. Ensure that fiscal policy is sustainable from a social and intergenerational perspective, by making rational use of existing natural resources in such a way that the rights of specific populations and future generations are not compromised.

8.3. Adopt a macro-fiscal planning framework with a view to strengthening their capacity to comply with human rights obligations as expeditiously as possible and to ensure compliance is sustained in time.

8.4. Design fiscal rules that guarantee rights and they must not be applied in ways that could undermine them.

 

Guidelines

Based on this principle States should:

1. Adopt a fiscal framework.
Follow a systematic plan justifying the fiscal measures to be adopted within a multi-year framework, including at least the following:

  • a diagnosis of how public finances will respond to the country’s situation in terms of human rights;
  • objectives, time frames and deadlines;
  • indicators to measure the effective fulfillment of the plan;
  • responsable institutions;
  • allocated resources;
  • accountability mechanisms. 

2. Prioritize sustainability.
Give priority to taxation as a source of income over borrowing, and establish a strategy ensuring the fiscal space that enables the adoption of  both discretional and non-discretional  counter-cyclical policy that is (automatic income stabilizers such as progressive taxes and spending, through mechanisms such as unemployment insurance).  

3. Adopt rights-affirming fiscal rules.
Refrain from adopting fiscal rules that unduly restrict the capacity of public institutions to respond to changing environments, with a view to progressively realizing rights and protecting the social advances achieved.

Abstain from adopting fiscal rules that prevent, aside from any other consideration, total public budget increases or which target key social sectors, over and beyond actual or expected inflation, as these and other excessively restrictive measures prevent States from complying with their human rights obligations. 

4. Adopt stabilization funds.
Ensure effective macroeconomic management of revenue from natural resources, through stabilization funds and other appropriate mechanisms.

  • Adopt economic and industrial policies that promote productive diversification. 

5. Ensure public debt sustainability.
Ensure that no decision relating to external debt contradicts the obligations to protect, respect and fulfill human rights.

  • Undertake independent analysis of debt sustainability that incorporates assessments of the effects on human rights.

 


 

09

States must guarantee the minimum content of economic, social, and cultural rights in their fiscal policy as a matter of priority.

States must:

9.1. Immediately ensure the right to an adequate standard of living and the minimum core content of economic, social, and cultural rights, regardless of economic cycles, and even in situations of crisis, conflict, emergency, and natural disaster.

9.2. Refrain from adopting fiscal rules that prevent the guarantee of the minimum core content of economic, social, and cultural rights.

9.3. Identify protected social spending that cannot be affected by economic cycles and is necessary to guarantee the minimum content of rights.

9.4. Give maximum priority to guaranteeing the rights of disadvantaged populations and put into effect a universal social protection floor as part of the right to social security.

Guidelines

Based on this principle States should:

1. Consolidate universal social protection.
Consolidate social protection systems that:

  • protect the income of people and their dependents when faced with diverse social, economic and climate shocks and risks (individual and collective);
  • promote access to public and social services, such as education and health and attend to the specific needs and vulnerabilities of people throughout their life cycle;
  • as part of the social protection floor, include, at least, access to essential medical attention, including maternity assistance; basic income security for children, by providing access to nutrition, education, attention and any other necessary goods and services; basic income security for working-age people who cannot work to obtain sufficient income, in particular in cases of illness, unemployment, maternity, and disability; and basic income security for the elderly.

2. Protect social spending.
Identify in their budgets the minimum protected social spending.

  • Protect the financing of the essential minimum core of economic, social and cultural rights.
  • Abstain from spending cuts in health and education in negotiations on loan conditionality agreements.
  • Make counter-cyclical expenditures to eradicate poverty and protect employment.
  • Increase spending allocated to the development of comprehensive and universal social protection systems during periods of prosperity, while supporting the establishment of saving mechanisms to ensure the possibility of realizing counter-cyclical social spending. 

3. Anticipate escape clauses.
Guarantee space in the budget for counter-cyclical policies that minimize the effects of economic crises on human rights.

Anticipate escape or exception clauses when there are restrictive fiscal rules preventing an increase in public spending, in cases when the guarantee of minimum essential levels or the principle of proportionality are not being fulfilled.


 

10

States must, by means of their fiscal policy, mobilize the maximum of available resources to achieve progressively the full realization of economic, social, cultural, and environmental rights.

States must:

10.1. Adopt different types of measures, including financial measures, to the maximum of their available resources, to progressively achieve the full realization of economic, social, and cultural rights.

10.2. Regularly assess the effects of the measures adopted to establish whether the maximum of available resources have been used to advance toward that objective as expeditiously and effectively as possible.

10.3. Use fiscal policy to maximize their resources. This involves not only using existing resources effectively but also, when necessary, increasing their income equitably, sustainably, and non-regressively. They must use the available fiscal space when the existence of resources that are not being mobilized are verified, such as those lost to fiscal evasion and avoidance, the underutilization of progressive direct taxes, badly designed tax expenditures and illicit financial flows, or by requesting international assistance and cooperation.

10.4. Ensure that fiscal rules do not restrict the capacity of States to advance as expeditiously as possible towards the progressive realization of economic, social, and cultural rights.

 

Guidelines

Based on this principle States should:

1. Improve tax administrations and the fight against fiscal fraud. Make tax collection and the fight against tax evasion and avoidance more effective and efficient, by improving the management of tax collection processes with the aid of information and communication technology, data analysis, and artificial intelligence. These efforts must seek to prevent fiscal fraud rather than focussing only on increasing collection after fraud has occurred, advancing towards legal frameworks that fix the loopholes and opportunities for tax avoidance (for example, by reviewing certain fiscal incentives and the criteria for taxing intra-group operations for the purpose of corporate tax).

  • Allocate adequate financial, human, and technical resources to their tax administration; ensure they are independent, impartial, transparent, and responsible, and appoint independent officials who are well-equipped, capable, and appropriately remunerated in the fight against fiscal fraud.
  • Within tax administrations, appoint specific offices with necessary powers, such as investigating the fixing of transfer pricing, and improving the recovery of tax debts.
  • Require customs officials and tax offices to use available databases to compare the global trading prices of goods to determine which transactions require more control.
  • Establish legal frameworks and guides to facilitate the reporting of crimes by tax authorities to the appropriate authorities. 

2. Make public all fiscal benefits.
Publish all the differentiated treatments established in their tax systems, including tax exemptions, fiscal benefits, releases and waivers.

  • Ensure the availability of information about the date benefits went into effect, their assessment and reasonableness, as well as the people and companies who are benefitting, including disaggregation by income decile, sex, etc.
  • Quantify their total fiscal cost, by beneficiary, sector and type of benefit or exemption. 
  • Justify tax expenditures by means of a clear description of the deliberate and concrete advances towards the enjoyment of human rights.
  • Supervise them publicly and transparently.
  • Regularly prove that the granting of tax relief to companies is the least restrictive option from the rights perspective.
  • Prior to granting tax benefits to mitigate investment costs, subject them to public hearings; condition them to the achievement of measurable objectives and limit them in time through expiry clauses. 
  • There must be no secret agreements.

3. Resource the fight against corruption.
Allocate resources to the fight against corruption.

  • Draft and implement effective regulations to obtain and manage the income flows from all sources, and to guarantee transparency, accountability, and Carry out training and awareness-raising campaigns for public officials on the social and economic costs of corruption.
  • Forbid the tax deductibility of bribery payments to foreign officials; 

4. Increase the effectiveness and quality of public spending by incorporating the outcomes of policy assessments.


 

11

States must ensure their fiscal policy does not generate unjustified regression in protection of economic, social, and cultural rights, even in contexts of economic crisis

States must:

11.1. Refrain from adopting regressive measures that affect the enjoyment of economic, social, and cultural rights. Exceptionally, they can do so if the measures are fully justified within the overall protection of rights, and are temporary, necessary, proportional and non-discriminatory, are decided in a participatory manner, and only after considering all possible alternatives. States must provide evidence of resource limitation to explain a regressive measure according to objective criteria such as the country’s level of development and economic situation, or the existence of other important needs.

11.2. Preserve social spending and abstain from undermining the enjoyment of rights achieved by means of their fiscal instruments, including fiscal rules. In economic crisis contexts, the protection of social spending and the rights of disadvantaged populations have maximum priority.

Guidelines

Based on this principle States should:

1. Ensure rights-affirming fiscal adjustment measures.
Ensure that policy commitments made in the context of adjustment do not violate national and international human rights obligations;

  • Establish a social protection threshold and a basic minimum content for rights which is always guaranteed, and which protects disadvantaged and marginal groups in particular; to this end States must compile disaggregated statistical information and increase the effectiveness of their efforts to protect economic, social, and cultural rights.
  • In the event that a cutback is duly justified in accordance with human rights standards, States must analyze its impact to ensure that it does not disproportionately affect the most disadvantaged and marginalized people and population groups. 

2. Ensure fiscal adjustment measures in crisis contexts protect social invesment.
Protect, maintain and even increase efforts in social and investment policies, particularly those aimed at vulnerable members of society, through adopting relatively low-cost programs, such as measures to ensure the right to adequate food for disadvantaged groups and people, and by not reducing the income of people with disabilities through actions inconsistent with human rights. When fiscal adjustment measures are adopted in a crisis context they should:

  • Gradually remove the austerity measures as the economy recovers after the crisis.
  • Review the fiscal regime to increase income, transparently and in a participatory fashion, in order to re-establish the levels of public and social services that existed prior to the crisis. 

3. Broaden the fiscal space.
Explore and exhaust less harmful measures in fiscal adjustment policies, such as increasing collection through progressive direct taxation, combating tax evasion and avoidance, adopting more flexible macroeconomic frameworks and fiscal rules, reallocating spending, managing international cooperation resources, and using international reserves prudently, among other possible alternatives for broadening the fiscal space. 

4. Maintain impact assessments and ensure accountability.
Undertake complete assessments of the possible effects of fiscal discipline policies in different national and subnational contexts before entering into commitments.

  • Carry out an in-depth analysis of the structural causes and abuses of power underlying any sovereign debt crisis, ensuring accountability by the public and private parties ultimately responsible. 

 

12

States are empowered, and on occasions obliged, to encourage or discourage certain conducts and correct externalities through specific fiscal policy instruments in order to guarantee human rights

States:

12.1. Can, and in some cases must, use to the maximum taxes, subsidies and other fiscal policy instruments to create conditions that contribute to the realization of human rights. With their fiscal policy, and more specifically their tax policy, States can pursue objectives that include halting property speculation, protecting the environment and moving towards a more sustainable development model, and promoting public health.  

12.2. Must take measures to dissuade the production, marketing, and consumption of tobacco, narcotics and other harmful substances; implement tax policies on tobacco products to reduce their consumption; and prohibit or restrict the sale and/or importation of tax and duty-free tobacco products by international travellers.

12.3. Must adopt protection and compensation mechanisms to prevent or mitigate possible regressive impacts of some of these instruments on certain groups and ensure that their implementation is coherent with other principles.

Guidelines

Based on this principle States should:

1. Ensure the right to health. Use regulatory and fiscal measures to protect public health with appropriately designed incentives and disincentives such as taxes on sugar-sweetened beverages and subsidies for healthy foods.

  • Eliminate fiscal benefits for activities and products that harm health. 

2. Ensure the right to housing. Take fiscal measures to promote a system of inclusive housing and avoid speculation and excessive wealth accumulation; use all the revenue collection and regulatory potential of property taxes, the raising of capital gains taxes and other fiscal instruments of territorial/land management. Such measures include reviewing the preferential fiscal treatment of owners compared with tenants; subjecting speculators and investors in luxury housing to higher taxes; and recovering and directing the profits earned by private owners as a result of public investment towards public purposes.

ACIJ- Asociacion Civil por la Igualdad y la Justicia
CELS-Centro de Estudios Legales y Sociales
CESR-Center For Economic and Social Rights
Dejusticia-Derecho Justicia Sociedad
Fundar-Centro de Análisis e Investigación
Inesc
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Principles of Human Rights in Fiscal Policy. ©2022