Guest post from Paolo de Renzio, introducing his new (Open Access) book
Taxes are funny. Most people think that they pay too much, and that others don’t pay enough. Many often try to pay less of them, but they also complain about the poor quality of the public services they fund. Politicians get credit for saying they will not raise them, but also for promising to do things that require more money. In other words, taxes present an interesting conundrum. To realize their potential as a core element of the ‘fiscal contract’ between states and citizens, they need to be seen as fair—and fairly applied. At the same time, governments need to be able to show that they are using them responsibly and effectively. That’s a tall ask, but one that deserves to be pursued by governments and demanded by citizens.
For much of the past few decades, taxes have suffered from a particularly bad reputation. The neoliberal mantra about taxes being a drag on efficiency and economic growth has led to many governments lowering top marginal income tax rates and slashing corporate taxes. Domestic tax systems have generally become more regressive, as governments have come to rely more and more on consumption taxes. In Brazil, the country where I live, the very rich pay a much smaller share of their income in taxes than the middle class and many poor people.
The resulting increase in inequality has started to generate a backlash, and taxes—or at least the need to make them fairer and more equitable—are now back in vogue. In fact, the past few years have seen a flurry of activism around addressing the blatant unfairness of international tax rules and systems, and of research linking unfair tax policies with increasing inequality.
As part of this broad movement, the last few weeks have seen calls to introduce a global tax on billionaires’ wealth on the news quite a lot. These have come from various sources, including a group of billionaires at Davos and a Brazilian government proposal to the G20. They are likely to get a boost from the incipient process that will lead to a UN Tax Convention and from the work of academics like Gabriel Zucman, who estimated that such a tax could generate $250 billion in annual revenues—more than global aid flows to developing countries.
International efforts aimed at reforming tax systems are important and commendable, as they can contribute to both reducing growing levels of inequality and generating additional revenues for governments. However, for these outcomes to be achieved, international efforts will not be enough. Tax reforms that promote equity are, by their very nature, mostly domestic (i.e. negotiated and implemented at the country level and not in international fora) and very political, as they touch on powerful vested interests. That’s why we need strong domestic constituencies fighting for more equitable taxation as a complement for global efforts. In turn, domestic pressure for tax reform can support global action, as more governments start supporting the necessary changes to international tax rules and systems.
Yet, for country-level activists interested in advocating for domestic tax reforms, there is precious little out there in terms of evidence and examples to help guide their efforts.
A few years ago, while I was still working for the International Budget Partnership and leading its newly created Tax Equity Initiative, we set out to fill that gap, scouting around for examples of successful campaigns by civic actors the world over aimed at making their countries’ tax systems more equitable.
Those stories have now been brought together in a recently published book called “A Taxing Journey: How Civic Actors Influence Tax Policy”, which documents seven cases from across the world of civic campaigns addressing various tax issues, from a campaign to end tax amnesties benefitting rich individuals and corporations in Mexico to a push to raise taxes on alcohol and tobacco to finance universal health insurance in the Philippines, and from efforts to reform the tax administration agency in Guatemala following a corruption scandal to the struggle to overturn a tax on mobile money transfers in Uganda, a service that helps poor people in rural areas have access to financial resources.
Rather than a rigorous academic study on when and why civic actors are able to influence tax policy, the book was aimed at learning some lessons that could be relevant for other groups interested in pursuing similar campaigns. It identifies five themes that emerge across the seven cases and that provide some sense of the factors behind successful tax equity campaigns:
- Being able to tell a good story. Narratives are key in a policy area as complex as tax. Appealing to people’s sense of fairness or making a case for the resources needed to fund basic services are some of the ways in which civic actors can craft an effective one in support of their campaigns.
- Purposefully deploying multiple strategies. Successful campaigns engage various actors and fora, both within and outside government, and learn along the way.
- Building diverse coalitions. Shifting the balance of power requires all the support you can get, and that is sometimes found in unexpected places (for example, think about parts of the business community or religious groups).
- Developing (or bringing in) different capacities. Technical capacity, while very important, is barely enough. Political and communications skills are just as important. If you don’t have them, ally yourself with someone who does.
- Taking advantage of reform opportunities (when they appear). Elections, crises, corruption scandals and the like can create long awaited windows of opportunity for reform. Those who are not ready for them stand to lose.
Some of these themes will be quite familiar to activists, practitioners and scholars of fields adjacent to tax reform. Nonetheless, the organizations and coalitions in the seven cases depicted in the book had to learn these lessons the hard way, through trial and error and with limited peer support. For others joining the fight, the book provides at least a menu of options that they can draw on for more direct inspiration.
The global struggle for more tax justice has gathered strong momentum and some important successes at the international level. For it to be successful, however, support for international initiatives will need to be coupled with reform at domestic level. In many cases, civic actors will need to lead the charge on that front. “A Taxing Journey”—it is my hope—will be there to provide some useful support and guidance to activists willing to embark on it.
Paolo de Renzio is Senior Lecturer at the Brazilian School for Public and Business Administration of Fundação Getúlio Vargas (EBAPE/FGV) in Rio de Janeiro
Please note that an open access pdf version of the book is available from the publisher’s website: https://www.bloomsburycollections.com/monograph?docid=b-9781350344648