Fair taxes for democratic and fair societies – International Trade Union Confederation

Report on Global Tax Justice and its Impact on Sustainable Development Goals

The Challenge of Global Tax Inequity and its Obstruction of the 2030 Agenda

Current international tax regulations present a significant impediment to the achievement of the Sustainable Development Goals (SDGs). A systemic issue exists whereby multinational corporations and high-net-worth individuals leverage tax havens to shift profits, thereby eroding the tax base of nations worldwide. This practice is compounded by decades of competitive corporate tax rate reductions among countries seeking to attract investment. The primary consequences of this system are:

• A critical shortfall in public revenue required for essential services.
• A structural shift in the tax burden from corporate profits and wealth to labor and consumption.
• The increased reliance on regressive consumption taxes, such as VAT and sales taxes, which disproportionately affect low-income households.

Direct Implications for Sustainable Development Goals

The failure to establish a fair and equitable global tax system directly undermines progress across multiple SDGs. The erosion of public funds creates critical financing gaps for programs essential to the 2030 Agenda.

1. SDG 10 (Reduced Inequalities): The existing tax architecture actively widens the gap between the wealthy and the general populace by allowing capital to avoid fair taxation while labor is taxed more heavily.
2. SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth): Insufficient tax revenue weakens social protection systems, including pensions, which are fundamental to poverty alleviation and ensuring decent work.
3. SDG 3 (Good Health and Well-being) and SDG 4 (Quality Education): National budgets, depleted by tax avoidance, are unable to adequately fund healthcare infrastructure, hospital staffing, educational materials, and teacher salaries.
4. SDG 13 (Climate Action): The lack of public funds directly inhibits a government’s capacity to invest in necessary climate mitigation and adaptation initiatives.
5. SDG 16 (Peace, Justice and Strong Institutions): When tax systems are perceived as unjust, public trust in governmental and democratic institutions erodes, weakening the foundation of stable and just societies.

A Pathway to Reform: The UN Framework Convention on International Tax Cooperation

A significant opportunity for systemic reform is presented by the negotiation of a United Nations Framework Convention on International Tax Cooperation. This initiative aims to create a fully inclusive, intergovernmental forum where all countries can participate on an equal footing in shaping global tax rules. The successful implementation of such a convention would directly support the achievement of the SDGs, particularly SDG 17 (Partnerships for the Goals), by strengthening domestic resource mobilization.

Key Objectives for a Reformed Global Tax System

To align with the principles of sustainable development, a new global tax framework should prioritize the following objectives:

• Taxation at the Point of Economic Activity: Ensure multinational corporations are taxed where their business operations, labor, and sales actually occur, and where economic value is created.
• Introduction of Progressive Tax Measures: Implement mechanisms such as a financial transactions tax on speculative trading. This would not only generate substantial revenue for development but also enhance economic stability, particularly in emerging economies.
• Strengthening Democracy and Public Services: Re-establish the role of fair taxation as the foundation for funding the public infrastructure, health, education, and social protection systems that enable societies to thrive and achieve the Sustainable Development Goals.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 1: No Poverty
2. SDG 3: Good Health and Well-being
3. SDG 4: Quality Education
4. SDG 10: Reduced Inequalities
5. SDG 13: Climate Action
6. SDG 16: Peace, Justice and Strong Institutions
7. SDG 17: Partnerships for the Goals

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 1: No Poverty

• Target 1.3: Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable. The article directly connects tax justice to funding for “pensions” and “social protection that supports us in hard times,” which are key components of social protection systems. It also notes that regressive taxes “fall hardest on low-income households,” undermining their financial security.

SDG 3: Good Health and Well-being

• Target 3.c: Substantially increase health financing and the recruitment, development, training and retention of the health workforce in developing countries, especially in least developed countries and small island developing States. The article explicitly states that due to the current tax system, “there is no money for hospitals” and that fair taxation determines “whether nurses have enough staff.” This highlights a direct link between corporate tax revenue and health financing.

SDG 4: Quality Education

• Target 4.a: Build and upgrade education facilities that are child, disability and gender sensitive and provide safe, non-violent, inclusive and effective learning environments for all. The article points out the lack of funds for “teachers” and questions whether “teachers have enough materials,” indicating that insufficient public revenue from taxes directly impacts the resources available for quality education.

SDG 10: Reduced Inequalities

• Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality. This is a central theme. The article critiques the current global tax rules that allow “billionaires to amass unimaginable wealth” while the “burden of taxation has shifted from those with wealth to those with wages.” The call for a UN Tax Convention is a call for a new fiscal policy to reduce this inequality.

SDG 13: Climate Action

• Target 13.a: Implement the commitment undertaken by developed-country parties to the United Nations Framework Convention on Climate Change to a goal of mobilizing jointly $100 billion annually by 2020 from all sources to address the needs of developing countries in the context of meaningful mitigation actions and transparency on implementation and fully operationalize the Green Climate Fund through its capitalization as soon as possible. The article opens by stating that working people are told “there is no money for… climate action,” linking the lack of public funds due to tax avoidance directly to the inability to finance climate initiatives.

SDG 16: Peace, Justice and Strong Institutions

• Target 16.6: Develop effective, accountable and transparent institutions at all levels. The article argues that the current tax system is an “injustice” where “trust erodes, democracies are questioned.” The proposed “United Nations Framework Convention on International Tax Cooperation” is presented as a mechanism to create a more just, transparent, and effective global institution for tax governance.

SDG 17: Partnerships for the Goals

• Target 17.1: Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection. The entire article is about this target. It describes how profit shifting and tax competition “eroding the funds that make societies thrive.” The proposed UN Tax Convention aims to ensure “multinational companies are taxed where they actually do business,” which would directly increase domestic resource mobilization for all countries.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Indicators for Domestic Resource Mobilization and Public Spending

• Implied Indicator (for Target 17.1): Total government revenue as a proportion of GDP, by source. The article implies that the proportion of revenue from corporate taxes has been decreasing, while the proportion from “regressive consumption taxes such as VAT or sales taxes” has been increasing. A successful outcome would reverse this trend.
• Implied Indicator (for Targets 1.3, 3.c, 4.a): Proportion of total government spending on essential services (education, health, and social protection). The article’s claim that there is “no money for hospitals, teachers, pensions” suggests this proportion is currently too low. An increase in public expenditure on these services would be a key measure of progress.

Indicators for Inequality and Institutional Reform

• Implied Indicator (for Target 10.4): The Gini coefficient or other measures of wealth and income inequality. The article’s focus on “billionaires… amass[ing] unimaginable wealth” while the tax burden shifts to workers implies that progress would be measured by a reduction in the wealth gap.
• Specific Indicator (for Target 16.6): The establishment and adoption of the “United Nations Framework Convention on International Tax Cooperation.” The article presents this convention as a primary goal and a tangible measure of progress towards creating a just and effective institution for global tax rules.
• Specific Indicator (for Target 17.1): The introduction of new tax measures like a “financial transactions tax on speculative trading.” The article proposes this as a specific policy that could be implemented through a new tax framework, serving as a concrete indicator of change.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

Source: ituc-csi.org