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Women Benefit From Progressive Tax Systems, Panelists Say

By Kevin Pinner · Mar 21, 2022, 8:50 PM EDT ·

World governments need progressive tax systems to fund a green economic recovery and pay for programs such as health care and education that benefit low- to middle-income women most, panelists said Monday during a conference.

Women gathered virtually to discuss how progressive taxation can support countries fighting climate change and pay for a just economic recovery from the current multidimensional crisis on the sidelines of the 66th session of the United Nations Commission on the Status of Women. Global Alliance for Tax Justice panelists discussed the links between taxes and women's rights, including how cuts to social spending disproportionately impact women.

"The decision to adopt a minimum tax for corporations at the global level is an admission by the global institutions that this is a failure of the system," said Rosa Pavanelli, general secretary of Public Services International, an alliance of trade unions.

Pavanelli's keynote included comments on the Organization for Economic Cooperation and Development's agreement in October to set a 15% minimum corporate tax rate. While she welcomed the progress, she said the rate is similar to those in tax havens and the rules seem to benefit wealthy nations more than developing ones.

"I think that we need to be aware and we need to be prepared to fight the decision that is going to be formalized in the OECD," Pavanelli said.

The panel's moderator, Chenai Mukumba of Tax Justice Network Africa, remarked that Pavanelli's comments echoed those by Jayati Ghosh, a University of Massachusetts Amherst professor of economics, during another event in the series.

"Tax justice is gender justice and gender justice is tax justice," Mukumba quoted Ghosh as saying.

Locking in a deal that primarily benefits rich nations "is creating further dependence, furthering of the colonial system, unequal development and injustice," Pavanelli said. She also said the war in Ukraine will hurt low- to middle-income women by driving up energy prices.

Shyleen Momanyi, co-executive director of the Young Women's Leadership Institute, said she's upset that the Kenyan government has responded to higher energy prices by hiking value-added tax rates. This places the burden disproportionately on low-income taxpayers who spend a larger share of their income on energy, according to a recent OECD report.

"In the first few months of this year, the government is imposing really harsh taxation on basic goods that are critical for families, especially for the common person, who lives on under $1 per day," Momanyi said. "Women are paid less, but incur the same VAT as their male counterparts."

Individual governments cannot address the problem of global base erosion and profit shifting, even though they all have the authority to establish more progressive tax systems, Pavanelli said. Unfortunately, tax systems have become less progressive in many parts of the world, panelists said.

"Budget cuts by the state often eliminate the very programs and services that primarily benefit low-income women," said Bhumika Muchhala, senior policy analyst at Third World Network, a research and advocacy organization.

For example, in the U.S., the Temporary Assistance for Needy Families, or TANF, program enacted in 1996 ended the New Deal-era Aid to Families with Dependent Children, which gave cash assistance to families with children experiencing poverty. TANF now "reaches far fewer families and provides less cash assistance to families" than the previous system, "leaving more families in deep poverty," the Center on Budget and Policy Priorities said March 1 in a brief.

More recently, the center said in December that about 9.9 million children are at risk of slipping back below the poverty line or deeper into poverty if Congress won't extend the expanded child tax credit, which so far it hasn't done.

Over the past several decades, governments around the world have privatized resources that used to be publicly owned and deregulated industries to benefit multinational corporations, Muchhala said.

"This turn toward fiscal austerity has been deeply gendered," according to Muchhala, because women tend to use public services, especially health care and education, more than their male counterparts. When those programs are privatized, they often become inaccessible without loans to low- to middle-income women, she said.

On a global scale, the financial system pushes governments to compete with each other for investment and loans by cutting social spending and lowering taxes for corporations, which makes it difficult for policymakers to place "the needs of citizens above the needs of creditors," Muchhala said.

She added, "This is a dependency that was created; it does not just exist by happenstance."

Since the 1980s, "there's been a shift in taxation from the rich to the lower income and workers particularly, and this has reduced progressivity in the taxation," said Emilia Reyes, program director of budget policy at the Women's Working Group on Financing for Development.

"Because of the sexual division of labor, women have been on the receiving end of the negative impacts," Reyes said.

In the late 1970s and early 1980s, most care services were included within countries' social protection systems, said Pavanelli. By basing the provision of these services on individual demand, "they became services that you need to pay for," which placed the burden more on women's shoulders, Pavanelli said.

Kathleen Lahey, a law professor at Queen's University Canada, said that women are studying and working more just as governments are spending less on social programs to support them.

"It is truly tragic that the more emphasis placed on women to do things to better themselves economically, the worse the care burden is on women specifically," she said.

There's not enough financing "for the various care activities that are needed to make women's and men's lives equivalent or even moderately equal in any way shape or form," according to Lahey, who blamed tax provisions in part.

"There is literally nothing that happens on this planet and to this planet that does not have tax implications," she said.

Alina Saba, program officer at the Center for Economic and Social Rights, said the pandemic's worsening of inequalities "shows that we live in a world of misplaced priorities."

Saba mentioned analysis from the International Monetary Fund showing coal, oil and natural gas received $5.9 trillion in subsidies in 2020 worldwide, about 6.8% of global gross domestic product, and that figure is expected to rise to 7.4% in 2025. Corporate tax evasion and avoidance costs governments about $460 billion to $600 billion each year, according to a report published in November by the FACT Coalition and Tax Justice Network. 

"This interchange of tax abuse, tax incentives and subsidies is the real challenge for progressive taxation," Saba said.

Momanyi said women, girls and activists all over the world "need to be really angry" and "hold our government accountable." Otherwise, she said, "we'll find ourselves in debt we need to pay instead of sustaining our life, sustaining our freedom, sustaining ourselves as humans." 

--Editing by Neil Cohen.

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