Gender and ethnicity in fiscal policy [1]
By Jonathan Báez
Download the presentation (spanish)
On the passed may 11th 2016, we participated in the reunion “dialogue about fiscal policy, Human rights and inequality in the Andean region” promoted by dejusticia, the host organization in Bogotá, the Center for Economic and Social Rights and the web of fiscal justice of Latin America and the Caribbean, a transcendent space for exchange about the fiscal theme in articulation with human rights.
The interventions highlighted the role of fiscal policies in the deepening of inequalities in the region. A special reference has been made to the weakness of the income tax to the people of the highest income decile as an instrument of redistribution[2], moreover, it’s been mentioned the great challenge that the tax avoidance and evasion – of people and enterprises- propound for the tributary recollection, those who would leverage the reduction of inequality.
The improvements, challenges and opportunities of the fiscal policies from the human rights perspective has been another of the themes treated in the reunion. In our intervention we tried to realize a brief reflection about the implications of the discrimination based on gender and ethnicity in the fiscal policy. Hereafter we present an extract of the presentation:
The importance that the indirect taxes possess in the structure of the tributary income exceeds the 50% in 15 countries of Latin America and the Caribbean, according to data of the ECLAC in the year 2013. The weight of this type of taxes is higher to the one registered in other regions of the world[3]; in the case of Ecuador, out of the total of tributary incomes collected by the central government, 69% is compounded by indirect tributary incomes.
The indirect taxes almost always are regressive because they graven to goods and services indiscriminately of the income level of the people that acquire them, so, the people with lower level of income would be paying more by the concept of indirect taxes. This is the case of the value-added tax, thus for example:
(…) if the value-added tax is 10% and a commodity costs 100 USD it means that it I paid 10 USD independently of how much you earn. If someone has a salary of a thousand this is 1% of the salary, however if the salary if of 100 000, this tax is barely 0,01% of the salary[4].
From this frame, the indirect collection of taxes acts as one of the principals sources of discrimination in fiscal policy[5], affecting to the poorest sectors of the population, especially to women[6] and groups historically vulnerable as indigenous, Afro-descendants, etc. This situation is sharpened when you consider the intersecionality of the ethnical, gender, between others. It’s been proved that to be born women, indigenous o member of a minority group, augments the probability to suffer economic impoverishment, and, consequently, conform the group of people with the major proportion of its income dedicated to the payment of indirect taxes, contrarily to the sector of the population with high rent who dedicate a greater part of their income to accumulation and savings.
To this situation there must be added that the amount transferred to other countries by illicit financial flows – which include human trafficking, mostly women[7] – in Ecuador reaches more than 25 thousand millions between 2004-2013, a figure higher to the recollection of direct tributary income in the same period[8].
The tributary income that the State ceases to perceive, either because of tax evasion or tax avoidance, must be resolved with other sources of income. So, fiscal policy, being articulated to the model of accumulation of every country (in the case of Ecuador the extractive primary exporter model), becomes discriminatory or regressive when it is put aside as a mechanism of income recollection to foster instead the increase of extractive activities. This is the case of the oil exploitation in the Yasuni ITT Park, home of isolated indigenous people and of an unparalleled vegetal and animal biodiversity in the world.
In CDES, in front of the announcement of extracting crude oil in the Yasuni ITT Park, it has been realized a proposal that demonstrated how it could be collected higher income than those it would be obtained if the pits were exploited in the park, through tools of progressive fiscal policy[9].
The proposal consists in increasing the tax burden, minimally, on the 110 economic groups, which have been the “major” beneficiaries of the economic growth and stability experienced during the last years. Actually, the tax burden on the sales of the 110 richest groups is 2, 9%. If only this burden would be increased by 1, 5%, we could obtain, in 25 years, at least 2000 million dollars additional to what is expected to be collected, in the same period, by the Yasuní exploitation.
[1] Jonathan Báez –Reasercher CDES.
[2] “In the region, the tax on the income of physical persons achieves on average a reduction of inequality of 2,1%, measured by the Gini coefficient, while in the 27 countries of the European Union the reduction is of 11,6%.” OXFAM-CEPAL 2016, Tributación para un crecimiento inclusivo.
[3] “The estimations of EUROMOD suggest that the mean of the effective tax rate in European Union is of 13, 3%. In respect of the 16 Latin American countries that have been taken in account, CEPAL estimates that the mean of the effective rate is around 2,3%, a figure that has been confirmed in general by the information of the national accounts.” OXFAM-CEPAL 2016, Tributación para un crecimiento inclusivo.
[4] Correa, R. 2012, De Banana Republic a la no República. Paradoxically this example has been presented by Correa, even if recently he promoted a Law establishing the increase of the IVA for a year, respectally to that see the reclamo de CDES. See: CDES ¿Por qué no incrementar el IVA?
[5] María Pazos M. y Maribel R. Fiscalidad y equidad de género, Fundación Carolina, Documento de trabajo No.43, Madrid, junio 2010.
[6] This way for example, the women register higher poverty nivels – by income- that the men (24% y 22.5% respectively in 2015). Furthermore, the breach between both increases since 2011 until 2015, meaning, in the period 2011-2015 there exists more poor women than men, in comparison with the period 2006-2010.
[7] See: https://vgopinion.files.wordpress.com/2016/04/enlace-hacia-iff_gender-grondona_bidegain_rodriguez.pdf
[8] http://www.gfintegrity.org/issues/data-by-country/
[9] Iturralde, P. 2013 Plan C: Redistribución de la riqueza para no explotar el Yasuní y salvaguardar a los indígenas aislados.
