Report of Regional Workshop on: Tax Justice and Gender Equality in Tax Systems in the Arab Region
Report of Regional Workshop on:
Tax Justice and Gender Equality in Tax Systems in the Arab Region
20 – 21 March 2017
Sparr Hotel – Amman, Jordan
The Arab NGO Network for Development and Christian Aid, in cooperation with Phenix Economic and Informatics Studies and Jordanian Women’s Union and under the sponsorship of Ford Foundation, held a Regional Workshop Tax Justice and Gender Equality in Tax Systems in the Arab Region as a part of the projects of the Network and its partner Christian Aid within the framework of this subject. This workshop is the outcome of the efforts deployed by both organizations in order to enhance the knowledge and awareness of social justice and equality in addition to the efforts deployed by the Network to promote the redistribution of resources and increase the governmental support to social protection means, due to the importance of tax policies in achieving development and social justice although this role was ignored most of the times. The workshop achieved its purposes, including the following:
•It brought together workers on both projects including academic researchers and activists interested in this subject, as well as international parties and global movements advocates to discuss the tax affairs of the Arab world, to share various experiences and to learn from international best practices in order to improve tax justice regionally;
•It issued the final regional report on gender analysis of tax justice in the Arab world subject of previous discussions resulting in publishing national studies in relation thereto (for each of Egypt, Lebanon and Tunisia), knowing that this report will constitute a main reference on this subject for all the civil society organizations in the region;
•It allowed further discussions of the four national reports of Egypt, Lebanon, Palestine and Jordan showcasing the status of tax justice and its impact on social justice in these countries; it also improved the ability to address the decision-makers by providing real, efficient and justified political recommendations;
•It helped in agreeing on a strategy for upcoming works and activities in order to achieve the aspired purpose; it resulted in launching the first regional alliance for tax justice in the region after determining its composition, role, functions, goals and distribution of roles between its members in order to facilitate future cooperation with interested parties including civil society organizations, governments and research studies to build capacities, pressure and advocacy for an efficient and a comprehensive social justice.
The workshop was held for two days on the 20th and the 21st of March, 2017 at Sparr Hotel in Amman and gathered the aforementioned different experts and parties, leading to a discussion rich in opinions and ideas. This report showcases the main ideas and outcomes of this meeting showing the future results expected thereof:
Day (1)
The 1st day was allocated for the different thematic frameworks in the economic, social and legal aspects of taxes, including: the need to adjust between the role of tax as an economic tool and a mean to achieve social justice; the role of tax in funding development within the frame work of 2030 agenda; the tax characteristics outside the borders and the relation thereof with human rights (including tax evasion, tax havens and global tax system regulations). The first sessions were assigned to discuss the international speech in the field of tax policies and to introduce the attendees, particularly the researchers and activists in the Arab world, to the concept of various and successful African, European and international experiences, in order to provide the Arab experts with the different ideas and opinions of foreign experts as a first step towards future research strategy and topics. One of the main discussed topics was the need of communities to address poverty and inequality through financial justice meaning through public services providing everyone with the basics for a decent life (health, education, social protection, etc.) and to consider taxes as a source of public proceeds that guarantee the public services supporting human rights and confronting poverty and inequality. For the achievement of this goal, it was agreed to adopt a progressive tax system in terms of targeting the poorest segments in the first place and to select the direct and indirect taxes carefully after taking into consideration the impact thereof on the poor and vulnerable segments of the society. However, this shall not deny the importance of taxes in determining the social responsibility of citizens and enhancing the concept of citizenship and democracy in terms of the representation of citizens by decision makers. The common issues in this subject were identified and summarized as follows:
1. Taxability: Reduction of tax collection or tax levy (lower than the capacities).
2. Regression: Those earning more money will participate less in the levy of taxes.
3. Greater burden on consumption and work instead of wealth and properties.
4. Increase of discrimination between genders through most of the tax systems.
5. Severe issue in the tax contribution of companies: tax evasion, tax incentives and misspending.
The limited success of the millennium development goals to the technical aspect is one of the reasons of difficulty to access education and other public services. Thus, it is crucial to consider different methods to finance the sustainable development goals and to compensate the damages thereof. It is important to research the development assistance provision methods and to benefit from the capacities available in the advanced countries providers of public services. For instance, why not benefit from the increase of national proceeds of oil-exporting countries? Why don’t we understand and analyze tax havens and illegitimate cash flow? In order to turn the tax system into an efficient contract between the citizen and the government, it is necessary to accredit and to impose transparency and justice methods in the resolution and public budget. In this context, it is essential to mention the example of German budget surplus followed by investigating the currency efficiency and interest rate in addition to the good financial management and the equity and investment in infrastructure. As for the beneficial ownerships discussed in the G20 meetings, an immediate global exchange of tax issues resulted thereof. All issues similar to tax duplication should be radically addressed due to the outbreak of corruption and the issuance of related decisions by the persons benefiting from these legal violations. Hence the pursuit of justice, knowing that the methods of collecting and spending funds must be progressive and must restore the citizens’ trust in the system.
Dr. Dereje Alemayehu, member and officer in the Global Tax Justice Network and African Alliance for Tax Justice, focused on the importance of tax collection from multinational companies, which is one of the main ideas of the latest campaigns of the Global Network. He also confirmed that the main reason of this issue is the exploitation of these parties of legal gaps in the regulations of the international tax system. One of the most important ways to discuss and address this issue is through the United Nations (for instance through the establishment of a special agency) as it brings together all countries and represents a platform not only to discuss and exchange different points of view but also to raise the voice and pressure on the demands. African countries in particular incur the greatest losses due to illegitimate cash flow, which is not only the result of internal factors but also global mechanisms and structures. One of the recent priorities of Global Network campaigns is “gender equality in tax systems” in order to limit the negligence of gender consideration in tax policies in terms of collection and expenditure. He also called for the establishment of a regional network dealing with the same subject and formed of national networks due to the several differences and approaches between countries and states. This allows enhancing the cooperation between regional and international civil society organizations on a wider scale, strengthening the situation and putting pressure on the concerned parties to implement common demands.
The workshop also included a presentation on the European experience, highlighting the status of the EU's common economic zone from the many economic factors (capital, commodities, employment and consumption) to the tax havens within the zone and the various taxes as essential to the sovereignty of EU member states. Then the speaker moved to discussing the impacts thereof such as the increase of economic burden on the employment and consumption versus the race to the bottom on corporate tax, rise of financial deficit and sovereign debt crises. As for the human rights aspect, the EU can do redistribution within the borders but not across borders. While inequality within European countries is relatively low compared to other regions, inequality among European countries is very high, as well as the recent erosion of social welfare systems recently. The speaker provided additional examples of the tax havens from which benefit big and well-known companies (in Luxembourg and Switzerland) and the panama papers findings on European banks that topped the list of Fonseca. It was noted that as a result of the lack of transparency and confidentiality in the disclosure of information, it is not possible to obtain any statistics or digital data to assist in estimating the rate of tax evasion and avoidance. For instance Apple Company registered in Ireland paid an actual task rate equal to 0.005% on profits in Europe and abroad and evaded an estimated 13 billion euros in taxes. The European Commission has ruled it a state of illegal state aid. The solutions currently being promoted include the following:
1. Establishing a United Nations international governmental tax body in charge of putting regulations.
2. Providing general reports on multinational corporations.
3. Providing general records of useful/distinguished property.
4. Surpassing Base Erosion and Profit shifting and adopting the tax for a more healthy economic cycle.
5. Publishing a comprehensive list of tax havens.
6. Whistleblowers' protection across the EU.
A presentation was also given on the taxes across the borders focusing on gender implications associated with the economic structure of countries and the creation of tax evasion, illegitimate cash flow, and other large gaps in government budgets, filled by women specifically. Women make part largely to poor low-income jobs, impacted severely by the weakness of public services, etc. It was emphasized that cross-border problems negatively affected poor and average-income countries mainly. It is our duty to discover, name and hold accountable the directly responsible country, and Panama papers are a good start for such an action. One of the essential things to fight is bank secrecy. The United States is about to become a great resort for tax havens and this is an issue that must be confronted immediately. This corporate tax system threatens to raise the value of the dollar from 15 to 25 percent around the world, which will affect the countries that carry debt in this currency and have to pay their debts accordingly, noting that these losses impact only the development and infrastructure of countries. With regard to the Maastricht Principles, they explicitly call for the prevention of any State from harming the interests of any other State but rather urge it to respect its laws. Switzerland and the United States, for example, underestimated the ability of Zambia, Jordan and Egypt to increase their incomes for development goals do not respect their duty to respect other countries' sovereignty and tax space. It is necessary to hold such countries accountable, as well as to periodically assess the different implications of policies and violations. To achieve all this, data and information calling for transparency must be sought.
In the second part of the day, the four national research papers (for Lebanon, Palestine, Egypt and Jordan) were presented within the scope of the leading project on tax justice in the Arab world in partnership with Christian Aid and funded by Ford Foundation. The purpose thereof was to allow the researchers to present drafts of their reports and to benefit from the views and comments of the regional researcher and the attendees to develop them. Among the most prominent results mentioned during these sessions were:
Lebanon Report:
Taxation in Lebanon is a process in which public income shares are extracted from low and average income groups and the workers to direct them to the political elite and employers / business stakeholders. The current Lebanese tax system aggravates inequalities due to the absence of public policies that avoid and reduce the unfair burden of taxes. The tax system is weak and largely depends on indirect and unfair taxes. The Lebanese economy suffers from the problem of unregulated labor. On the other hand, the redistribution of resources in Lebanon does not occur through the system of taxation, but through the clientele and nepotism, meaning through the non-governmental actors that are part of the state apparatus. This is in addition to the high rate of tax exemptions and tax evasion, as well as the lack of provision of public services and social welfare by the government, and the absence of tools to consolidate a system that identifies and maintains the dynamics of forces.
Egypt Report:
Key policies and challenges facing Egypt's tax system are the following:
1. Lack of transparency: For instance, no discussion of important decisions such as the International Monetary Fund (IMF) loan (even in parliament) and no general discussion of the budget.
2. The decline of tax system (most income comes from indirect taxes such as sales tax and now VAT + 22.5% ceiling on income tax is very low). Thus, the person who earns 250 thousand pounds pays the same tax as the one who earns 2 bn.
3. No taxation of wealth.
4. Structural issues in the application of VAT: the former subjection of professionals + a significant and sudden increase in the tax rate and telephone taxes increasing from 5% to 22% overnight + decrease of exemptions.
5. Administrative issues facing the Egyptian Tax Authority: It is dependent on the Ministry of Finance; educational and cultural knowledge is not taken into account in the regulation of tax payment + politicization of policies.
6. Absence of paperwork culture among taxpayers and citizens: Not only payers of low taxes are the ones who refuse/neglect giving receipts, but also senior employers - for example doctors and teachers who provide special lessons - and thus the problem of the informal economy in addition to the current structural issues aggravate.
7. Absence of social exemptions in the Egyptian Constitution, for example, for working women, for the expenses of education and health.
8. Lack of trust between society and tax authority: Absence of the concept of citizenship.
9. Jordan Report:
The tax system in Jordan mainly depends on indirect taxes, especially the general tax on sales and special taxes, which created a failure in the fairness of the tax system, as these taxes do not distinguish between the poor and the rich, and contributed in deepening social inequality, due to its contribution in raising the prices in general, creating pressure on the poor and middle classes. It is also characterized by a lack of real progressivity trait, and thus it is a system lacking social justice. The tax system in Jordan is also inefficient due to its inability to collect tax from taxpayers, where the indicators of tax evasion are increasing dramatically. In the light of these conclusions, the following recommendations can be made:
1. Expanding the income segments subjected to the progressive tax to reach 5-7 segments and thus to become fairer in representing the income levels in Jordan.
2. Reducing general sales tax levels to 10% instead of 16%.
3. Annulling special and very high taxes, especially on the communications and fuel sector.
4. Developing tools for monitoring and collecting taxes from business sectors to stop the drain of tax evasion and to strengthen law enforcement.
5. Enhancing the participation of stakeholders in tax policy-making and control (the private sector, workers, civil society and various trade unions).
6. Increasing the awareness of policy makers and implementers as well as taxpayers (in the role of tax policy in achieving social justice and combating social inequality).
Palestine Report:
The legal framework of the Palestinian tax system is old and subject to British, Jordanian, occupational and Palestinian laws and does not take into consideration the development of the Palestinian society. There is a significant imbalance in the distribution of the burden between direct and indirect taxes, for the benefit of the latter. In early June 2015, President Mahmoud Abbas issued a law that serves the amendment of the Income Tax Law No (8) for the year 2011. Pursuant to this decision, the highest tax level was reduced to 15%, as the size of tax evasion in the West Bank and Gaza Strip is estimated at about 50% and the income tax contribution is estimated in 122 million dollars out of 2,756 million dollars representing the total tax for 2015, which is 4.4% only. Also, the tax contribution of the free professions sector in the tax income revenues did not exceed the 11% only. As for the value added tax, it reached 16% and is linked to the Paris Convention which states that it shall not be less than 2% of its counterpart in the occupied territories. This tax generates about 845 million dollars annually, at an approximate rate of 31% of the total taxes, customs and excises levied by the authority. It is important to note that the investment exemptions also affect the collection as more than 600 Palestinian companies of large size benefit from investment exemptions, and therefore do not pay the tax. The Authority's total revenue from taxes, customs and excise duties is estimated at about 92% of the Authority's total revenues.
The final regional report on gender justice in tax systems in the Arab world was also launched after researchers presented the national case studies (for Lebanon, Egypt and Tunisia) that contributed to its development. The most important of what was mentioned in this report are the recommendations stemming from the detailed gender analysis of tax justice in the Arab countries provided by the regional researcher as follows:
1. To remove clear discriminations against women in the tax laws of these countries and to give separate tax reduction to family providers in accordance with articles 1, 2, 5, 13, 15 and 16 of the Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) and the general recommendation no 21 that prohibits the existence of gender discrimination in the tax system. Adequately, the laws of income tax should be reformed in order to increase the minimum income which is exempted from taxation, taking into account the country's poverty lines and inflation rate.
2. To reconsider tax laws in favor of a more equitable system that relies on direct taxation instead of the current model and to apply tax incentives and exemptions specified by gender.
3. To request detailed gender data on taxpayers and workers in an unstructured form as an important step towards tax policies that reinforce more equal gender relations. The gender tax justice requires that the state puts at the disposal of researchers, students and all male and female citizens tax information showing the contribution of women and men to direct and indirect taxes so that we can determine the effects of income taxes according to gender, estimate the relative burdens in a gender approach and examine the gender tax justice.
4. To apply indirect taxes policies that are more sensitive to gender through the elimination of taxes on commodities and services consumed primarily by women or of primary importance to women. Thus, pressure must be exercised for a preferential tax treatment for those commodities and services reinforcing in a big way gender equality and social welfare in domains such as reproductive health.
5. Gender tax justice must be applied within the context of gender social justice in public policies, in order to eliminate discrimination between women and men in the economy as a whole; major changes outside the tax system must be made through the government expenditure on public services, and that to invest in social infrastructure to increase women's employment and to contribute in filling the gender gap in employment. In this regard, governments should accelerate the transition process from item budgeting to gender responsive budgeting.
6. To have tax revenues devoted to quality and accessible services in education, health and anti-poverty policies such as family allowances for mothers, pensions, unemployment and disability programs and the ability to reduce inequality between classes and genders.
7. To have a strong existence of tax justice on the agenda of women movement while gender inequality should also be an essential focus for the promoters of the tax and social justice.
8. To review the existing labor laws while taking two objectives in mind, the first is treating women’s issues (such as maternity leave) and the second is the attempt to integrate the unstructured sector into the structured economy as well as to find a way to assess the unpaid work of women, thereby increasing the government's income and providing workers with the best advantages and securing their rights.
9. Civil society in support of equality and political activists in these countries should engage with governments and parliaments in a dialogue to integrate the gender into public policies, including taxation. A paper should be prepared on the position from tax gender equality issue and make it the base of their claim as well as a public awareness campaign should also be prepared on gender equality and implemented it in the three countries through workshops, social media and training courses.
Mr. Samir Al-Eita also spoke about taxation and unstructured labor in the region based on the results of the Arab Observer 2016 report on unstructured work. This day was a prelude to achieve the objective of the workshop in forming the alliance which occupied the second day of the workshop.
Second day
The second day of the workshop was devoted to networking for tax justice after the exchange of regional and global experiences and the discussion of the strategy to be followed during the establishment and management of the expected regional alliance that includes: acts of adherence and advocacy, capacity building, the involvement in various fields, scientific researches and others. This day started with short interventions by experts in the field of networking for tax justice, one of them belongs to Oxfam and the Christian Aid international organizations, the other one belongs to the global alliance as well as to the African alliance for tax justice and the third one to the European organization. The aim thereof was to provide the interested participants to in Arab alliance with knowledge about the regional and global case studies - including successful and failed ones - in addition to the management and organization methods of these organizations and the upcoming steps to be an intellectual basis that we and our partners proceed from in drafting an operational plan for our alliance and its projects. These experts gave a historical overview of the issue of taxation and networks related thereto and highlighted the most important ideas to be taken into account and the common thematic priorities. Then, under the management of Mr. Firas Jaber from Social and Economic Policies Monitor - “Al Marsad” Palestine, the discussion of forming an alliance began with the idea of adherence and advocacy followed by the other points mentioned above.
I - Adherence and advocacy
Speaker: Mr. Iyad Al- Riyahi from Social and Economic Policies Monitor (AL Marsad) - Palestine
The most important statements of Iyad:
1. There are two aspects of tax justice: fiscal policies and social aspect (advocacy)
2. Before answering the question “how does advocacy contribute to changing the existing balance of power", it is necessary to identify the existing balance of power: the private sector ...
3. We need to move from focusing on the stage of congregation and criticism to providing acceptable alternatives to the people.
4. The most important is to strengthen the dialogue/negotiation with the government and to take into account that the tax system is necessary to finance government expenditures, which is an economic tool for the interaction of society.
5. It is essential for the speech to be clear and the alternative to be available before resorting to the street.
6. There must be a discussion with the sections of the private sector on social affairs and the mechanism of social dialogue.
He mentioned the most important challenges in this regard, related to the lack of information and data, hindering the possibility of providing alternatives and the disproportion between taxes on individuals and corporate taxes, etc.
II. Capacity building
Speaker: Mr. Khaled Ali - Egyptian lawyer
He is currently developing the guide of the Arab network non-governmental organizations for the development on tax justice that is directed to the civil society parties aiming to build its capacity in order to reach equitable Arab tax systems. He pointed out that it is important to involve the political parties in campaigns, as political parties play a role in the openness to other actors (Morocco’s project). He also stressed that the guide should have national characteristics, taking into consideration the targeted category of the guide and the use of accessible portfolios, a set of indications, data, caricature, etc…
Other ideas include:
1. The corporate social responsibility is the tax not charity or assistance, as reducing the tax burden in return of assistance in not useful because we lose the standards of accountability, citizenship and rights.
2. Tax is not only a tool for social justice but for economic engineering (priorities, sectors).
3. The need to develop an agreement of ethics on the subject of taxes.
4. The need to create an open platform for exchange and expansion of participation, the use of SMS, the placement of boxes in supermarkets and the ministry of citizens.
5. Education on this subject in the beginning of the educational system is very important.
Then, he moved to the anticipated difficulties:
1. The definition of tax justice shall include the rates, timing, method of collection, etc.
2. The outbreak of corruption and the adoption of its systems, the absence of transparency and inaccessibility to the information.
3. The role of armies in Arab economies, the absence of tax accountability.
4. The taxes on professions (doctors, lawyers) have implications on people.
5. The imposed tax agenda is an international agenda, the avoidance of big companies.
6. Civil society is not sufficiently integrated. There are challenges associated with the civil society organizations: legitimacy (the extent of representation), the need to expand partnerships.
7. The taxes subject is oligarchic: the need to mainstream knowledge and put it on the agenda of the civil society organizations, as the movement and knowledge are inseparable.
Mr. Khaled concluded by saying: Raising awareness must be related with providing alternatives, then comes the change (change needs a political party project to vote for change) and going to the street is to fill the gap in the work of the civil society organizations and political parties. It is necessary to look at tax policy/system entirely and not to cut off any kind of tax.
III. Paths, Partnerships and Alliance Expansion
Speaker: Mr. Ahmed Awad, Phenix Center
1. Accurate stakeholder mapping must be carried out in each country.
2. Civil society organizations are of a human nature / defense the human rights and therefore political parties can benefit from the accumulation done by civil society.
3. It is also necessary to deal with stakeholders syndicates and businessmen groups that are interested such as industrialists, organizations that are representatives like syndicates.
4. As well as parliamentarians: including some possible ally partners that give strength and protection, even if temporary.
5. Also, academics think thanks learning centers that help to propose alternative policies.
6. Nevertheless, Gulf States are not convinced in tax principle and should consider how to deal with it.
During this strategy, we must have a clear vision of the system of values that are the basis of the laws of each country (with stressing that messages vary according to the overall context of the country) and we need to develop policies for affected social categories to adopt these policies and to achieve business sustainability. The gender mainstreaming issue should be taken into consideration in our strategies in order to develop tactics for all categories to minimize the losses even at the regional / international level and it is also possible through mapping of networks and campaigns. The goal is not to worsen the situation if it doesn’t improve, for that there should be an agreement on a reference paper that is linked to the contexts.
IV- Researches:
Speaker: Dr. Nasr Abdelkarim, Economist Researcher
1. Tax policy is a public policy reflecting conflicts of interest. The private sector calls for tax exemptions to stimulate growth.
2. The need to look for alternatives: rationalization of government expenditure, prevention of waste, borrowing, and taking into account the implications on future generations.
3. Is the claim that taxes stimulate investment and development is true? An important research topic.
4. It is also important to check the size of tax evasion and tax avoidance: Who is the beneficiary? Private sector companies benefit from exemptions, evasions and avoidance even if there are legal gaps that must be filled.
5. We have to think about family expenditure/consumption and relate it to VAT so that we can constructively build our defenses.
6. It is important to know that the commercial budget deficit has increased, and the productive sectors have an impact on VAT and customs.
7. The most important is analyzing the government expenditure on the needs of poor categories for example gender responsive budgeting.
V- Structure:
Speaker: Ms. Zahra Bazzi, Arab NGO Network for Development
Ms. Zahra began by stating that a small sized coordination committee was held four years ago in Beirut and included five organizations in order to start work on establishing a regional tax justice alliance for the Arab world. Then, she put forward the most prominent ideas received at that time and presented the different organizational forms that can be taken by this alliance and the multiple ways of its management based on the reference paper prepared by (Al Marsad) Palestine and the Arab Network which was shared with the attendees before the meeting. Then, she presented several suggestions on the subject, including:
1. The necessity to start with establishing a special website for this alliance that shows its structure which will be an opportunity to develop common ideas and to create the first electronic reference for it.
2. It is important to answer this question: Who joins the regional alliance other than national alliances? Will there be one member from each country or more?
There was also the proposal of a basic association of each country (a comprehensive structure) that belongs to one essential entity (the association), thus to begin with building national alliances, determining their path and naming them.
1. The necessity to develop an action plan.
2. Development of a media with distinct identity.
•Deepening in the field of research.
•Coalition identity.
•Work mode.
The need to take into account the situation before and after the war.
The speaker stated that the meeting of the parties was positive and that the issue was very important as the tax is the common feature in the pains and priorities of the people of the region. The subject of tax justice constitutes a qualitative shift in the work of the network and organizations as it is linked to the priorities of popular congregation and to the subject of social justice in general. The discussion then lead to an agreement on the role of the group as supporting national alliances (the framework is not exclusive to members of the network but it is open to the concerned civil society organizations, which have a similar interest and direction; there is an openness to all movements, organizations and political parties to be discussed later on). It was agreed on the following tasks:
1. Continuing to build the alliance.
2. Building the website.
3. Regional and national research agenda.
4. Expansion to other countries taking into account the reality.
5. A report we share with everyone
Recent publications
