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Six years ago, when the effort to promote greater transparency in the global financial system began to gain traction, it was well understood that at some point private sector support would be a key factor in achieving progress. Last week at the International Bar Association’s (IBA) annual meeting in Boston, an IBA task force released a report that takes a major step in that direction. The study examined the issue of tax evasion from the "perspective of international human right law" and found that there is a linkage between human rights and the use of secrecy jurisdictions and other measures used to avoid or evade taxation.
Titled "Tax Abuses, Poverty and Human Rights," the report—published by the IBA’s Task Force on Illicit Financial Flows, Poverty and Human Rights—found that the evasion of taxes has "considerable negative impacts on the enjoyment of human rights." Specifically, the study noted that by depriving governments of the resources needed to promote economic and social progress, the evasion of tax is an abuse of human rights. Further, it noted that actions by jurisdictions that "encourage or facilitate tax abuses. . . could constitute a violation of their international human rights obligations."
There is no silver bullet to fix the problem, of course, and the IBA notes that actions by numerous parties are required to address the issue of tax abuses. Developing countries, it believes, have an "obligation to use the maximum available resources to . . . realize human rights" and to build capacity to increase tax collection. Developed nations have an "obligation to assess and address the domestic and international impacts of corporate, fiscal and tax policies on human rights." Moreover, the task force had no fear of turning a light inward when it also noted that "lawyers have a special role in addressing tax abuses." The report pointed out that "merely complying with tax law is not enough when this results in the violation of human rights."
By linking tax evasion (and the financial mechanisms that facilitate tax evasion) to human rights, the IBA laid down a marker indicating that "business as usual" should no longer be tolerated, and—indeed—to continue operating in the same old way may soon become untenable. We have entered, perhaps, the "new normal" in which a callous disregard for the implications of tax abuse will no longer be perceived as the benign activity of the wealthy or powerful. The IBA notes that much more work needs to be done, but that human rights "make[s] a valuable contribution by drawing further public and political attention to" the corrosive impact of tax abuse. To paraphrase Winston Churchill, the IBA’s report does not indicate the beginning of the end of the fight to eliminate tax evasion, but it very well could be the end of the beginning.
Tom Cardamone is Managing Director of Global Financial Integrity, a non-partisan, non-profit research and advocacy organization based in Washington, DC.