Document
Sustainable Resourcing for Sustainable Development
Good afternoon everyone, peace be with you.
First time I visited this building I saw on a wall upstairs “The golden rule” with people from all over the world and different religions sort of covered by the words. We need this common value of “The golden rule” to guide the leaders of the world to work for peace and justice so that all people can live in dignity.
“Everyone as a member of society, has the right to social security.” (Declaration of Human Rights, Article 22.)
Churches and faith based organizations have historically been at the forefront of providing social services and support to those living in the socio-economic margins. As people of Faith we are deeply concerned by the growing inequalities and the impacts on lives of people everywhere. We believe that social protection is an essential requirement for a just society. We believe that taxation is a fundamental instrument for redistributing wealth and for financing the common good. (Sigtuna statement on Theology, Tax and Social Protection 2017)
Without reducing inequality, meeting SDG 1 to eliminate poverty will be impossible. Inequality has a multitude of negative consequences; it excludes large populations from common goods and services that could secure their fundamental rights, development and welfare. In 2017 the World Economic Forum’s Global Risks report identified rising income and wealth disparity as one of the most important trends that determine global development.
On the plus side – the world has never been richer – we can reach the SDGs if we want to. We can afford it but governments need reliable national resources.
Quote:
Health and education are spelled T.A.X. - Jon Lomøy, Norad, Norway’s aid agency
In order to finance the SDGs and reduce (economic) inequality countries will have to mobilize most of the funds from their own resources.
Numbers vary, but up towards 90% of the resources must be raised locally. This will not be easy, especially for low-income countries and fragile states. According to the IMF this will require LIDCs (low income developing countries) to spend 14% more of GDP by 2030. Increasing taxes by more than 1% per of GDP year is considered very difficult. Sustaining this over time will be very challenging.
This raises the next question. How can we make sure that such an increased level of taxes have the necessary legitimacy? Without legitimacy taxation will likely fail, and we won’t reach the SDGs.
Our experience from Norway and the development of our society is that social protection (health and education) and progressive taxation must be at the core of this social contract that increased taxation entails. People must see what their taxes are contributing too. They must see that by paying taxes you gain rights.
A social protection “floor” should be available to all. We therefore call for redistribution through progressive taxation such as income tax, wealth taxes or financial transaction tax for the common good.
Faith based organizations have an important role with an ethical approach encourage and hold politicians accountable for social spending, how they protect their people, protect human dignity and to ensure that funds are well spent and uncover corruption. FBOs often themselves deliver health care and education and therefore have knowledge as well as local presence.
For an example, I’d like to point to Tanzania where Christians and Moslems (Christian Council of Tanzania, Tanzania Episcopal Conference, Moslem Council of Tanzania) shows how the government through collection of taxes due new taxes, and ring-fencing can ensure health insurance coverage for all Tanzanians.[1]In a previous report[2]lost tax revenues were estimated to $1,83 billion annually, enough to triple health spending or double education spending. This underlines word of wisdom from Tanzania: “I am because we are.”
Countries should welcome activities like this and safeguard the space for civil society to continue this kind of work.
Then, we must make it easier for all countries to raise taxes. The income from taxes makes a way to strengthen human rights through common good.
In the short term countries should collect all taxes due. Donor countries must deliver on the Addis Tax Initiative and double tax related aid. One dollar spent on tax assistance could generate 10, 100 dollars in taxes.
According to UNECA African states may lose $100 bn a year in taxes due to aggressive tax avoidance.[3] We need to make it harder for companies and rich individuals to dodge taxes.
We therefore call for financial transparency and an overhaul of the international tax system:
- Public and comprehensive country by country reporting for all sectors
- Public registries of beneficial ownership
- Upgrading the UN tax committee to an intergovernmental global body where all countries can set new tax norms together
I would like to point to the work of the Independent Commission for the Reform of Corporate Taxation (ICRICT).[4]ICRICT calls for a unitary approach to taxation where taxable profit is distributed by formula coupled with a minimum global tax rate. This is where we need to go. And we need a vision to get there. A vision of a world where the benefits and resources are shared, and everyone can live in dignity.
Not all countries will be able to raise enough taxes to reach the SDGs. We therefore must look at other ways of financing – public and private.
The private sector is a very important source of funds. However, governments should be wary of giving tax benefits to corporations to get them to invest by shrinking the tax base. Governments need to cooperate on regulating foreign companies and investments in order to avoid a race to the bottom. They must enforce tax laws and prevent corruption and illicit capital flight.
Low-income countries and some lower-middle income countries will not be able to reach the SDGs without increased aid and concessional funding. Raising taxes will not be enough.
We need new and innovative financing like financial transaction tax, carbon taxes and wealth tax.
A reliable international funding mechanism for social protection need to be put in place, especially for social protection floor in the poorest countries. Social protection is recognized as a key instrument to end poverty and to give people access to opportunities for a self-determined life in dignity. Countries that introduce universal protection systems, have a popular constituency that will fight to keep the benefits.
In our globalized economy, individual countries can´t control on their own the taxes that escape their fiscal system. TAX avoidance is by law legal, but may lead to illegal TAX evasion.
We need political authority with moral authority.
The global community of nations pledged in its 2015 Addis Ababa Action Agenda on Financing for Development to give “strong international support” to help countries “meet the need of all communities”.
The international commitment is explicit and ambitious, SDG 1, Target 1,3: “Implement nationally appropriate social protection systems and measures for all, including floor, and by 2030 achieve sustainable coverage of the poor and vulnerable.”
Like The golden rule, the SDGs have a human face.
Thank you!
[1]https://www.kirkensnodhjelp.no/globalassets/lanserte-rapporter/2018/make-it-possible.pdf
[2]https://www.kirkensnodhjelp.no/globalassets/lanserte-rapporter/2017/one-billion-dollar-question-f.pdf
[3]https://www.uneca.org/stories/experts-call-combined-forces-stem-illicit-financial-flows