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Taxation and Social Justice in International Human Rights Law

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About The Author

Naz Khan (Regular Writer)

Naz Khan is an LLM. candidate at Durham University. His main interests lie in civil issues and corporate law, and it is his intention upon completion to pursue a career as a barrister. Outside the law, he enjoys travelling and charitable work.

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Mr. Justice Holmes said “Taxes are what we pay for civilized society.” Too many individuals, however, want the civilization at a discount.

Franklin Delano Roosevelt

The United Nations General Assembly adopted the International Covenant on Economic, Social and Cultural Rights (ICESCR) in 1966. Along with the Universal Declaration of Human Rights, the ICESCR comprises part of the International Bill of Human Rights.

The ICESCR reflects the commitments adopted after World War II to promote social progress and reaffirm faith in human rights. As of April 2020, 170 States are parties to the International Covenant on Economic, Social and Cultural Rights. 

Among the rights protected by the Convention are a number of economic rights, including a right to work freely (Art 6), rights to fair wages and a decent living (Art 7) and a right to social security (Art 9).

ICESCR in Focus

Under Article 2(1) of the ICESCR, in line with s36 of General comment No. 24 (2017), States have an obligation to work towards full realisation of the rights in the Convention:

Each State Party to the present Covenant undertakes to take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.

This obligation can extend into tax policies - for example, states should encourage business actors who deepen international tax cooperation and do not undermine the States’ efforts to combat tax evasion, tax avoidance and abusive tax practices by transnational corporations.

However, hundreds of billions of dollars in revenue is lost annually due to deficiencies in the global taxation system. In 2016 the United Nations (UN) Committee asserted that in the UK, tax policies such as reducing corporation tax and increasing VAT had an adverse impact on the UK’s ability 'to collect sufficient resources to achieve the full realization of economic, social and cultural rights for the benefit of disadvantaged and marginalized individuals and groups’.

Given that Art 2(1) ICESCR requires States to promote the rights within the Convention, ‘to the maximum of its available resources’, it must be asked how far a failure to collect taxation at sufficiently high levels may undermine not only social justice, but the international obligations States have in respect of it. However, until the ICESCR can be effectively enforced and its provisions clearly understood, it is unlikely to be effective in terms of achieving tax or indeed social justice.

This article is therefore an attempt to understand the deficiencies of the ICESCR, and how best to go about clarifying these obligations as they apply to global taxati

Enforcing ICESCR through Monitoring Bodies

The extent to which monitoring bodies have been effective in holding States to account is somewhat limited. In respect of the ICESCR, all that is required is that States submit records of their progress to its monitoring body, the Economic and Social Council (ECOSOC). There is very little in the way of enforcement mechanisms following from this.

However, there exists an Optional Protocol containing various enforcement mechanisms, including those that apply to individuals seeking to vindicate their social and economic rights. Where a State has ratified the Optional Protocol, the ECOSOC may have more success in holding States accountable where they have failed to make resources available for social justice issues due to tax policies. The Protocol will require greater consideration of whether a violation of the ICESCR has been committed by a State who has ratified it. However, as long as this remains optional, it can hardly be considered a robust mechanism for promoting tax justice.

Beyond this, ascertaining that a State has failed to uphold its obligations may be difficult. The UN High Commissioner for Human Rights recognises that the content of social, economic and cultural rights are often vague or unclear. Proving that a State has or has not made available all possible resources, by collecting taxes appropriately pursuant to promoting social justice, would seem something of a daunting task for any regulator.

Judicial interpretation of the ICESCR can play a role in assessing the progressive realisation of social, economic and cultural rights, but is mostly limited to definition of terms and tests of reasonableness. The enforcement mechanisms available to national courts are also highly variable between countries. Unless improvements are made to make clear when international monitoring bodies are to take action - and to give those bodies more tools for enforcement - judicial clarity is unlikely on its own to influence States’ taxation policies and thus help to achieve social justice.

A hierarchy appears to exist in International Human Rights Law (IHRL) whereby social, economic and cultural rights exist as secondary to civil and political rights. While this article does not analyse this general statement of IHRL, it is of note that so long as social, economic and cultural rights are not treated as being of primary importance, particularly when compared to civil and political rights, it is unlikely that they will be capable, when taken into account their lack of certainty and enforceability, of being used to hold States to account pursuant in this area.

Enforcing ICESCR through the ICJ

As mentioned above, a view exists that progressive realisation of the ICESCR under International Human Rights Law to promote social justice could be achieved through the judicial system. Whilst the lack of mechanisms in the ICESCR itself in this regard undermines the ability of international human rights law to achieve tax justice, it may be the case that an Advisory Opinion by the International Court of Justice (ICJ) could mitigate such difficulties.

Arguably, the role of the ICJ as the ultimate dispute resolution mechanism has evolved in many ways to include human rights, such that it may hold States to account directly for their failure to uphold their ICESCR obligations.

Another option would be for countries to collectively and pre-emptively seek an Advisory Opinion from the International Court of Justice (ICJ) on the nature of States’ – and in particular developed States’ – human rights obligations in the area of international taxation. This option is clearly more ambitious as it would require majority support in the General Assembly, or in any one of the UN bodies authorised to seek an Advisory Opinion from the ICJ, for a resolution requesting such an opinion. An Advisory Opinion could enable countries to exert significant pressure on developed countries to address the flaws in their tax systems without the need for their buy-in.

At first glance it seems that an Advisory Opinion would indeed be useful in holding States to account where they have failed to dedicate sufficient tax resources to uphold their ICESCR obligations, mitigating the enforcement problems as discussed above. However, whilst this may be true, problems remain in terms of the vagueness of the ICESCR obligations, and the fact that opinions of the ICJ are persuasive authority only.

Research is currently being undertaken into how far an Advisory Opinion might be used to determine the scope of the obligations upon States under the ICESCR, and how States might be held to account in respect of their tax policies when they undermine the rights contained in the ICESCR. However, until such clarity is provided, while an ICJ Advisory Opinion would avoid some of the problems stemming from the lack of enforcement mechanisms in the ICESCR itself, it is unlikely to be sufficient in holding States to account for their tax polici

A Model Taxpayer Charter?

There have been calls for the creation of a Model Taxpayer Charter, with a view to fostering a relationship of mutual trust, respect and responsibility between taxpayers, tax advisers, tax administrations and the State. The provisions are derived from a survey of taxpayer rights and responsibilities in 41 countries and aim to provide a model to be used and embedded in national laws.

The Model Taxpayer Charter does not reference the ICESCR provisions, and indeed appears to be focused on the relationship between the State and the individual taxpayer rather than any wider commitment to social justice or international human rights law. However, some commentators argue that the Charter may contain a blueprint for what a good tax system should comprise. It is possible that the development of such a charter could incorporate the need for tax systems to collect sufficient taxes to meet their ICESCR obligations.

Again, however, questions regarding enforcement may arise, as states reserve the right to determine how they tax their residence. While international tax treaties are common, the extent to which these agreements enhance revenue collection and promote tax neutrality is questionable. International tax treaties tend to favour developed countries with developing and third world countries often seeing minimal gains in tax revenue and foreign direct investment. A model taxpayer charter incorporating ICESCR obligations would undoubtedly require unanimous decision, widespread cooperation and the establishment of an independent body to oversee execution and accountability - the same things currently hobbling the ICESCR itself.

Conclusion

Not only is there a lack of robust enforcement mechanisms attached to ICESCR, but the lack of clarity as to the scope of the obligations within it render even action by the ICJ potentially unable to hold States to account. The enactment of a Model Taxpayer Charter may be capable of incorporating some of these responsibilities with a view to holding States to account, but again without certainty in terms of what those obligations contain, it is difficult to accept that success may be achieved in this way.

In short, the ability of international human rights law to promote tax justice and ensure that States uphold their commitments under the ICESCR seems limited, with a lack of satisfactory options in the current international system or on the horizon.

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Tagged: Human Rights, International Law, Tax Law

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