What kind of Tax Campaigning works best in developing countries – top down or bottom up?

August 10, 2018

     By Duncan Green     

Tax Justice has become a big deal among a range of NGOs, including Oxfam. There’s a lot of global campaigning on things like tax havens and tax evasion by transnational corporations, but what kinds of campaign make sense at a national level in countries like Vietnam and Nigeria? Two new pieces dropped into my inbox on the same morning earlier this week on that very subject. They describe very different approaches and some interesting tensions between them.

First up, Oxfam in Vietnam: A new case study discusses how a coalition of CSOs influenced national tax policy. Here’s some excerpts from the 3 page summary:

‘Oxfam worked with a range of partners to campaign for greater transparency requirements in the tax affairs of multinational companies (MNCs). This resulted in the government introducing new regulations requiring MNCs to file country-by-country tax reports, helping to strengthen tax transparency and tackle tax avoidance in Vietnam.’

This model of campaigning takes the global demand for country-by-country reporting, which helps governments detect tax evasion by transnationals, and translates it into the national arena. The tactics include:

  • Setting up a national ‘Tax Justice Alliance’
  • Forging alliances with thinktanks and the Vietnam Chamber of Commerce and Industry
  • Flying in international tax experts to build credibility with the government

As a result, ‘the government agreed to introduce a regulation in Decree 20 which requires MNCs to file country-by-country reports directly with Vietnam’s Tax Bureau. Although this information is only available to the tax bureau and not the general public, it is an important first step in ensuring that MNCs pay their fair share of tax and compensate for the public assets, infrastructure and services they use in Vietnam.’

Fantastic result, and the report more or less echoed my prior picture of national tax campaigning – part of a global movement, and a bit geeky (lots of pictures of people sat round tables with flip charts).

So I was struck by a blog by Kas Sempere on ActionAid’s completely different approach in Nigeria, which starts from a very different place:

A trader, let’s call her Amaka, grows and sells her products in a local market in Nigeria – an activity for which she pays tax. In the last two years, her tax payments have risen from NGN2,000 to NGN12,200. She now finds it hard to keep her business running and she has not seen any real improvements in the market’s infrastructure and maintenance or in the public services she accesses. What can the concept of ‘tax justice’ and tax justice campaigns offer her?

In 2012, ActionAid decided to federalise its tax justice campaign, and incorporate demands from the local and national level of several countries, including Nigeria. While up until then the campaign had focused on tax avoidance by multinational companies and harmful tax incentives, ActionAid’s Nigerian partner JDPC-Ondo brought new, locally relevant issues to the campaign. For example, many Nigerians face ‘multiple taxation’, or being taxed more than once for the same thing by different levels of government due to deficient harmonisation between administrative tiers. The decentralised and flexible nature of ActionAid’s campaign allowed this issue to be integrated effectively.

However, there were additional issues faced by Nigerian market traders that were not included in the broader international campaign. These included sudden and steep tax increases, and corruption and harassment by tax officials. While ActionAid could perhaps have provided more support to the actions of market traders, such as when they sent letters to the government and went on tax strikes, there is an inherent tension between organic activism at the local level, and the constraints of more formalised campaigns, which need to prioritise themes and ensure cohesion across national and international levels.

What can we learn?

My recent ICTD working paper explores ActionAid’s journey through the process of incorporating the demands and actions of local market traders in Nigeria into its international tax justice campaign. It finds that trader-led claims are the best entry point for mobilising market populations and ensuring ownership of the campaign. Claims with distant targets are likely to work only later once mobilisation is more consolidated. In Nigeria for example, multiple taxation was the issue that galvanised market traders’ interest in tax justice, laying the foundation for activism around higher-level issues such as corporate tax avoidance and harmful tax incentives. Therefore, the order in which campaign claims are introduced is key.

I also found that locally-specific issues can be effectively incorporated into international campaigns. For example, the inclusion of multiple taxation helped bring much greater visibility to the issue, especially for tax authorities in Nigeria. ActionAid’s experience holds valuable lessons for other organisations involved in tax justice activism, particularly in relation to integrating local experiences into larger international campaigns.’

Fascinating to watch the evolution of tax campaigning, and Kas’ insights into the value of integrating bottom up and global views of tax justice seem very useful. Thoughts?

August 10, 2018
Duncan Green