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Tax To Finance The SDGs, But Not To Undermine Them
This blog post was jointly authored by Nora Lustig, Brahima Coulibaly, Ian Gary, Sanjeev Gupta, Warren Krafchik & Wilson Prichard
This week over 170 policymakers, government officials, and members of academia, civil society and international organizations will gather in Berlin to discuss the future of the Addis Tax Initiative (ATI). The overarching goal of the ATI is to improve domestic revenue mobilization (DRM) in order to finance the Sustainable Development Goals (SDGs). More than 55 countries, regional and international organisations have joined the ATI, which commits donors to collectively double their assistance to DRM, developing countries to step up their tax collection efforts, and all members to ensure “policy coherence for development.” However, noticeably absent from the ATI’s progress monitoring is the issue of equity. Indeed, analysis by Oxfam finds that only 7% of DRM support reported by ATI donors in 2017 contained clear goals related to equity or fairness in revenue systems.
The importance of equity
If the primary goal of DRM projects and reforms is simply to collect more revenue, this can have negative consequences for development efforts. For example, revenue targets (like collecting 15% of GDP in tax) can create perverse incentives to collect wherever it is most feasible- which can harm those without political power such as the poor or women the most. Tax and transfer systems in low and middle-income countries are, in general, far less effective than those in OECD countries at reducing poverty and inequality. In fact, research by the CEQ Institute shows that in 16 out of the 29 countries analyzed, taxes and direct transfers to the poor actually increased income poverty. Of course, part of that pattern reflects the inadequacy of social spending, but it equally reflects the need for a greater focus on the equity implications of tax reforms.
Priority areas for increasing equity in DRM
Given that in low and middle-income countries, taxes on consumption currently make up over 60% of revenues, there is a great deal of room for making tax systems more equitable at the national level. We suggest four priority areas for reform:
1. Strengthening taxation of income and wealth: OECD countries collect about 10% of GDP in personal income taxes, while non-OECD countries collect only slightly more than 2% of GDP on average. There is much developing countries can do to better tax professional incomes, increase the progressivity of income tax schedules, and tax inheritance and capital gains. When it comes to wealth, it remains largely undertaxed, despite a surge in ultra-high net worth individuals (especially in developing countries). An increasing amount of that wealth is being concentrated in real estate, yet property tax collection is similarly low. Non-OECD countries on average collect merely 0.5% of GDP from property taxes (compared to 2-3% in OECD countries). If low and middle-income countries as a group could reach 1.5%, this would be equivalent to an additional $28.9 billion in government coffers annually: more than total combined aid disbursed by Canada, France, Netherlands, Norway and Sweden in 2017.
2. Rationalizing the use of tax incentives: Tax incentives to attract investment can play a legitimate role in economic policy. Unfortunately, studies suggest that tax incentives in developing countries frequently continue to be characterized by excessive discretion, poor monitoring and little transparency. The result is reduced revenue and little new investment – in effect, a handout to corporations and wealthy interests. More transparent and accountable governance of tax incentives is needed.
3. Reducing the burden of consumption taxes and informal and nuisance taxes on the poor: While many assume that the poor do not pay much tax in low-income countries, they actually bear a heavy fiscal burden due to a wide array of consumption and informal taxes, small subnational taxes and levies, and formal and informal user fees to access essential services. In low and middle-income countries, consumption taxes make a significant proportion of the poor poorer than they were before taxes and transfers. Unless the poor can be sufficiently compensated with transfers, exemptions for basic foodstuffs and other essential goods may thus be necessary. Studies from Sierra Leone and the DRC suggest that total formal and informal burdens of direct taxes, levies and user fees make up as much as 10-20% of the incomes of poor households. Limiting these burdens should be given significantly greater priority.
4. Enhancing the participation of accountability stakeholders: Civil society organizations, academic institutions, women’s rights groups, and journalists have a critical role to play in monitoring and pressing for increased fairness in tax systems, voicing the concerns of the vulnerable, and advocating for the translation of tax revenues into public benefits. Nevertheless, in 2017, only 7% of DRM aid (reported to ATI) supported these actors.
Parallel action is also needed at the global level to make the ATI’s third commitment to “policy coherence” a reality:
1. Reforming the international tax system: While the BEPS Action Plan was a useful first step in trying to combat aggressive tax avoidance, it is not enough. Low-income countries continue to be disadvantaged by restrictive tax treaties and often still have little voice in global decisions that impact their taxing rights. All countries should be given the opportunity to raise their voice in the BEPS 2.0 negotiations, even if they are not members of the OECD Inclusive Framework – a situation that pertains to half of ATI partner countries. Meanwhile, existing international rules continue to be difficult to implement in lower-income countries, which are substantially more dependent on corporate tax revenues than OECD countries. A continued push for developing country taxing rights and priorities, including simplified approaches to enforcement, is needed.
2. Increasing cooperation on tackling offshore tax avoidance and evasion by wealthy individuals: It is estimated that Africans hold $500 billion in financial wealth alone offshore, which results in governments losing around $15 billion per year in unpaid taxes. Progress must be made to include developing countries effectively in automatic exchange of information processes and ensure effective collaboration in cases of tax evasion, while strengthening rules on beneficial ownership.
3. Continuing external support: In low-income countries, even the most substantial improvements in DRM will not generate enough revenue to finance adequate social protection and human development floors. External support such as aid will therefore remain critically important in pursuing equity at the global level.
Prioritizing equity in the ATI agenda
The theme of this week’s conference is “Towards a Roadmap for the ATI post-2020.” In drawing that roadmap, we are calling on ATI members to focus more explicitly on equity and inclusion. Along with the priorities outlined above, we propose that members of the ATI:
1. Adopt specific indicators on revenue composition in monitoring progress on Commitment 2, in order to prioritize not only collecting more revenue, but from more progressive sources, like direct taxes on income and property, rather than indirect taxes on consumption.
2. Regularly assess, under Commitment 3, tax spillovers and the distributional impact of tax policy reforms. ATI donor countries should conduct tax spillover analyses to ensure that their own corporate tax rules and practices, and tax treaties, are not undermining their DRM support. ATI partner countries should conduct distributional impact assessments in order to ensure the drive for more revenue does not come at the expense of achieving the SDGs, particularly on inequality and poverty.
3. Make a collective commitment to increase tax transparency. All government ATI members should commit to transparency on data about tax collection, tax policy decisions, administrative practices, and the amount of revenue raised from each type of source. In addition, all ATI members should commit to encouraging and facilitating the engagement of accountability stakeholders, and to support the effective representation of developing countries in international policy-making forums.
Rhiannon McCluskey (ICTD), Paolo de Renzio (IBP), Nathan Coplin (Oxfam) and Ludovico Feoli (CEQ) also contributed to this piece.
For more on this topic, read our brief: What Might an Agenda for Equitable Taxation Look Like?
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Ludovico Feoli
Permanent Researcher and CEO, CIAPA, Executive Director - Center for Inter-American Policy and Research at Tulane UniversityNora Lustig
Professor - Economics, Samuel Z. Stone Chair of Latin American Economics
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Upcoming Events
Storytelling in the Language Classroom K-12 Educator Workshop
This online workshop focuses on books for the Spanish language classroom and highlights interdisciplinary connections for the language, arts and science classrooms. Increase the diversity of books in your school library with these stories from Latin America.
Registration closes on February 12, 2021.
The pandemic this past year has challenged educators in unimaginable ways. Learning environments have been reinvented as teachers constantly struggle to connect with students in meaningful ways. This presentation shows how storytelling can create learning environments that nurture as well as educate.
Storytelling is one of the oldest forms of education, entertainment, and cultural preservation. Given its natural and universal appeal, storytelling can be particularly valuable as an instructional strategy in the language classroom. Attendees will learn how to harness the benefits of storytelling, from creating a more nurturing learning environment that encourages active participation to increasing verbal proficiency among all students.
The presenter, an award-winning children’s books author and teacher, will provide examples from her own books and classroom.
Registration is $10 and includes a copy of a book presented, ready-made lessons to introduce into your teaching, and a certificate of completion. Confirmation of your registration will be sent via email within 2 days to provide access to the Zoom Workshop. Space is limited.
REGISTER TODAY TO RESERVE YOUR SPOT! Deadline to register is February 12, 2021
Sponsored by Tulane University’s Stone Center for Latin American Studies and the Pebbles Center in partnership with the New Orleans Public Library.
For more information, please call 504.865.5164 or email crcrts@tulane.edu.
Laura Anderson Barbata: Transcommunality Exhibit K-12 Educator Orientation
Join us for an evening with Tom Friel, Coordinator for Interpretation and Public Engagement as he walks through an innovative tool developed to share the Newcomb Art Museum’s latest exhibit, Laura Anderson Barbata: Transcommunality. The program is designed to introduce K-12 educators to Laura Anderson Barbata’s work and focus on specific elements of the exhibit that connect deeply to the K-12 classroom. While the exhibit is open to limited public access, it plans to open to the public and school visits by Fall 2021. Educators from across the country will find this online introduction to Barbata’s work a valuable resource as the virtual exhibit serves as a unique tool for online learning.
Read more about this exhibit from the Newcomb Gallery of Art About the Exhibit page below:
“The process-driven conceptual practices of artist Laura Anderson Barbata (b. 1958, Mexico City, Mexico) engage a wide variety of platforms and geographies. Centered on issues of cultural diversity, ethnography, and sustainability, her work blends political activism, street theater, traditional techniques, and arts education. Since the early 1990s, she has initiated projects with people living in the Amazon of Venezuela, Trinidad and Tobago, Mexico, Norway, and New York. The results from these collaborations range from public processional performances, artist books and handmade paper, textiles, countless garments, and the repatriation of an exploited 19thcentury Mexican woman ‘” each designed to bring public attention to issues of civil, indigenous, and environmental rights.
In Transcommunality, work from five of Barbata‘s previous collaborations across the Americas are presented together for the first time. Though varying in process, tradition, and message, each of these projects emphasize Barbata‘s understanding of art as a system of shared practical actions that has the capacity to increase connection. The majority of the works presented are costumed sculptures typically worn by stilt-dancing communities. Through the design and presentation of these sculptures, Barbata fosters a social exchange that activates stilt-dancing‘s improvisational magic and world history. At the core of this creative practice is the concept of reciprocity: the balanced exchange of ideas and knowledge.
The events of this past year ‘” from the uprisings across the country in response to fatal police shootings to the disproportionate impacts of Covid-19 among Black and brown communities to the bitter divisiveness of the 2020 presidential election ‘” have renewed the urgency for Barbata‘s multifaceted practice. In featured projects such as Intervention: Indigo, participants from various backgrounds reckon with the past to address systemic violence and human rights abuses, calling attention to specific instances of social justice. In The Repatriation of Julia Pastrana, Barbata‘s efforts critically shift the narratives of human worth and cultural memory. The paper and mask works presented in the show demonstrate the impact of individual and community reciprocity, both intentional and organic. Through her performance partnerships in Trinidad and Tobago, New York, and Oaxaca, represented throughout the museum, onlookers are invited to connect to the traditions of West Africa, the Amazon, Mexico, and the Caribbean and the narratives these costume sculptures reflect on the environment, indigenous cultures, folklore, and religious cosmologies.
By encouraging diverse collaborators to resist homogenization and deploy the creative skills inherent to authentic local expressions and their survival, Barbata promotes the revival of intangible cultural heritage. Transcommunality horizontally values the systems of oral history and folklore, spirituality, and interdisciplinary academic thought that shape Barbata‘s engaging creations, celebrating the dignity, creativity, and vibrancy of the human spirit.”
An Evening with Multi-Award Winning Author Elizabeth Acevedo
REGISTER FOR THE ZOOM WEBINAR HERE.
Join us for an evening with Elizabeth Acevedo. Acevedo presents her third book, Clap When You Land, and discusses her writing process and performance background. The discussion will be followed by a reading.
Poet, novelist, and National Poetry Slam Champion, Elizabeth Acevedo was born and raised in New York City, the only daughter of Dominican immigrants. She is the author of Clap When You Land, (Quill Tree Books, 2020); With the Fire On High, (Harper, 2019); the New York Times best-selling and award-winning novel, The Poet X. (HarperCollins, 2018), winner of the 2018 National Book Award for Young Adult Fiction, the 2019 Michael L. Printz Award, and the Carnegie Medal; and the poetry chapbook Beastgirl & Other Origin Myths. (YesYes Books, 2016), a collection of folkloric poems centered on the historical, mythological, gendered and geographic experiences of a first-generation American woman. From the border in the Dominican Republic, to the bustling streets of New York City, Acevedo’s writing celebrates a rich cultural heritage from the island, inherited and adapted by its diaspora, while at the same time rages against its colonial legacies of oppression and exploitation. The beauty and power of much of her work lies at the tensioned crossroads of these competing, yet complementary, desires.
This online program is free and open to the public. It is part of our ongoing series of public engagement programs with Latinx writers that explore Latin America, race, and identity. Read more about Acevedo’s work in this recent article from The Atlantic.
Sponsored by the Stone Center for Latin American Studies and the Newcomb Institute.
REGISTER FOR THE ZOOM WEBINAR HERE.
For more information, please email crcrts@tulane.edu or call 504.865.5164.
Global Read Webinar Series Spring 2021
The Stone Center for Latin American Studies coordinates the annual CLASP Américas Award for Children’s and Young Adult Literature and is excited to collaborate with other world area book awards on this exciting online program. Join us this spring 2021 as we invite award winning authors to join us in an online conversation about social justice, the writing process and an exploration of culture and identity across world regions. This annual Global Read Webinar series invites readers of all ages to join us as we explore books for the K-12 classroom recognized by world area book awards such as the Africana Book Award, the Américas Award, the Freeman Book Award, the Middle East Outreach Council Book Award, and the South Asia Book Award.
Each webinar features a presentation by an award-winning author with discussion on how to incorporate multicultural literature into the classroom. Be sure to join the conversation with our webinar hashtag #2021ReadingAcrossCultures.
SPRING 2021 SCHEDULE – Read more about the program here.
All webinars are at 7:00 PM EST.
- January 12 – The Américas Award highlights the 2020 Honor Book, The Moon Within by Aida Salazar
- February 3 – The Children’s Africana Book Award highlights the 2020 book award winning, Hector by Adrienne Wright
- March 11 – The Middle East Outreach Award presents 2020 Picture Book award winner, Salma the Syrian Chef by Danny Ramadan, illustrated by Anna Bron
- April – Freeman Book Award, a project of the National Consortium for Teaching Asia will present a book TBD.
- May 13 – South Asia Book Award presents The Night Diary by Veera Hiranandani
All sessions are free and open to the public. All times listed refer to Eastern Standard Time (EST). Sponsored by the Consortium of Latin American Studies Programs, the South Asia National Outreach Consortium, the Middle East Outreach Council, and African Studies Outreach Council, The National Consortium for Teaching about Asia.
Reading Latina Voices Online Book Group for High School Educators
This spring 2021 we invite all K-12 educators to join us once a month in an online book group. This past year has been a challenging one for everyone but especially K-12 educators. Sign up and join us as we explore the stories of women confronting identity as Latinas in the United States. Tulane University’s Stone Center for Latin American Studies, AfterCLASS and the New Orleans Public Library partner to host this online book group. The books selected are recognized by the Américas Award and focus on the Latina experience. The group begins with the work of award-winning author and poet, Elizabeth Acevedo who will speak in a unique online format on March 23rd presented by Tulane University’s Stone Center for Latin American Studies and Newcomb Institute.
You have the option of registering in two methods:
- A) $15 includes your own complete set of books for the series mailed to your home;
- B) Free – you find your own copies of the books at your local library.
REGISTRATION DEADLINE IS JANUARY 29, 2021
Reading Schedule – Thursdays at 6:00 PM CST
- February 11 – Clap When You Land by Elizabeth Acevedo
- March 18 – The Poet X by Elizabeth Acevedo
- April 15 – American Street by Ibi Zoboi
- May 13 – The Revolution of Evelyn Serrano by Sonia Manzano
Sponsored by AfterCLASS and the Stone Center for Latin American Studies at Tulane University and the New Orleans Public Library.
Central America, People and the Environment Educator Institute 2021
This summer educator institute is the third institute in a series being offered by Tulane University, The University of Georgia and Vanderbilt University. This series of institutes is designed to enhance the presence of Central America in the K-12 classroom. Each year, participants engage with presenters, resources and other K-12 colleagues to explore diverse topics in Central America with a focus on people and the environment. It is not required to have participated in past institutes to join us.
While at Tulane, the institute will explore the historic connections between the United States and Central America focusing on indigenous communities and environment while highlighting topics of social justice and environmental conservation. Join us to explore Central America and teaching strategies to implement into the classroom. This year’s institute will be a blended online learning environment incorporating both asynchronous and synchronous sessions. All synchronous activities occur between 4 – 7 pm CST Monday through Thursday.
Early registration is now open and will end on May 3, 2021. Early registration is $15. Starting May 4 registration will increase to $30. AfFor more information, please email dwolteri@tulane.edu or call 504.865.5164.

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