Around 186 million people are living in poverty in Latin America and the Caribbean, of whom 69 million live in extreme poverty. In addition, this is the most unequal region in the world. The extensive structural problems in the region necessitate this milestone report addressing the issues from a human rights perspective.
The report recognizes the links between inequality and poverty, affirming that governments must fight the two in tandem.It upholds the centrality of fiscal policies to addressing poverty and inequality as a matter of human rights, demanding the prioritization of women’s and indigenous peoples’ rights in state policies, as well as those of other groups disproportionately affected by poverty.
Last year, a coalition coordinated by CESR and comprised of Asociación Civil por la Igualdad y la Justicia (ACIJ), Dejusticia, Fundar, Centro de Estudios Legales y Sociales (CELS), Instituto de Estudos Socioeconômicos (INESC) and International Budget Partnership (IBP), sent a briefing on the issue to the IACHR. Drawing on this briefing the IACHR included a special section in its report analyzing fiscal policies (Chapter 4.B, page 174) and recognizing their centrality to its own agenda. The report highlights the first thematic hearing on fiscal policy and human rights, in 2015, and the dialogue in 2016 on the human rights impacts of austerity measures in the region, both sponsored by CESR and the coalition of organizations mentioned above.
It is not possible to analyze the state’s efforts to eliminate poverty without assessing its fiscal policies, according to the IACHR. The report identifies three factors preventing government fiscal policies from reducing poverty and inequality in the region.
First, the IACHR points to insufficient tax revenues—a result of useless tax exemptions or harmful tax evasion and avoidance. "The weak levels of tax collection have a disproportionate impact on the poorest sectors of the population, becoming an obstacle to adequately financing policies and programs," the IACHR argues.
Second, the IACHR questions the regressive nature of most tax systems in the region, a condition that prevents fiscal policies from curtailing poverty. The IACHR notes that in several countries of the region, people living in poverty are not beneficiaries, but actually net payers into the tax system. Drawing on the report made by Magdalena Sepulveda, former Rapporteur on Extreme Poverty and Human Rights of the UN, the Commission explains that "high tax rates in goods and services and low rates on income, wealth and property bring about unjust and discriminatory outcomes.” The IACHR notes that "the impact of regressive fiscal policy and tax systems is evident in inequalities across social groups by criteria such as age, ethnicity, and between inhabitants of rural and urban areas."
Third, Latin America’s insufficient social spending is another concern of the Commission. Social spending is 60% lower than the Organisation for Economic Co-operation and Development’s (OECD) average. “Although Latin America has made notable progress in increasing the level and progressivity of social spending, it remains low by international standards.” In addition, “social policies and programs sometimes do not have a human rights approach, so they have not necessarily translated into the configuration of rights," concludes the Commission.
Finally, the IACHR emphasizes that "the principles of human rights constitute a framework that underpins the key functions of fiscal policy and taxation.” Therefore, says the Commission, standing human rights obligations such as the duty to protect minimum essential levels of rights enjoyment, the duty to mobilize the maximum available resources to progressively fulfill ESCR and the principle of equality and non-discrimination should be powerful standards to guide fiscal policy. The Commission also emphasizes that the principles of transparency, participation and accountability "should be implemented throughout the policy cycle, from the preparation of budgets and tax codes or the allocation of expenditures to the supervision and evaluation of their consequences."
This development at the IACHR is the latest in a rapidly growing global trend of human rights mechanisms countering unjust tax and fiscal policies. Several UN treaty bodies have now engaged in some aspect of tax policy, including the Committee on Economic Social and Cultural Rights, the Committee on the Rights of the Child, and the Committee on the Elimination of Discrimination Against Women. Special UN Procedures have also been quite active in assessing the human rights impacts of tax policies. CESR has played a pioneering and important role in this process, strengthening accountability mechanisms, providing evidence to challenge fiscal injustices and building alliances with civil society organizations and social movements at regional and global levels.