ADB's Asia Pacific Tax Hub a Trojan Horse
by Pooja Rangaprasad and Jeannie Manipon
April 6, 2022
The Asian Development Bank (ADB) launched the Asia Pacific Tax Hub on domestic resource mobilization and international tax cooperation in 2021. The stated objective under “international tax cooperation” is to promote tax initiatives of the Organization for Economic Cooperation and Development (OECD), a club of mostly high-income countries.
This explicit design and rationale of the Asia Pacific Tax Hub is extremely concerning considering the long history of criticism by developing countries, including in Asia, of OECD tax standards being biased and unfair.
Several Asian countries are not part of these OECD forums. For instance, the ADB notes that 26 of the 46 ADB developing members are not part of the OECD BEPS Inclusive Framework. (BEPS stands for “base erosion and profit shifting.”)
Asian civil-society organizations have criticized this ADB tax hub for being created without broad public consultation in the region and expressed concerns that it will reinforce the gross power imbalances in decision-making around global tax rules.
Rather than address the global constraints to domestic resource mobilization, the ADB tax hub will only reinforce the current problematic power dynamics in the international tax architecture dominated by OECD countries’ interests. It also raises important questions on how regional cooperation gets defined in Asia, and in whose interest.
Criticism of OECD tax standards
Developing countries have for years criticized OECD tax standards as biased and ineffective. During the recent negotiations of the OECD BEPS tax deal, the African Tax Administration Forum noted that Africa risked being “collateral damage” in the process.
Argentina’s finance minister has also complained that the BEPS deal is bad for developing countries, with their concerns largely ignored in the process and being forced to choose between “something bad and something worse.”
Pakistan, Sri Lanka, Nigeria and Kenya have already rejected this recent OECD tax deal. Pakistan’s finance minister said his country did not join the deal as it has “nothing for developing countries.”
Nigeria’s finance minister explained that many developing countries would experience reduced revenue collection by implementing the OECD deal.
A recent United Nations report noted that the 2021 tax deal of the OECD Inclusive Framework would only benefit a small number of developed countries and that developing countries stand to lose out.
Civil-society organizations globally are calling on developing countries to reject this tax deal and not sign on to any OECD multilateral, legally binding agreements that will implement these decisions.
Currently, it is only a political statement and not a binding agreement. The question arises as to why the ADB is promoting such OECD decisions, and in whose interest.
The Group of 77 and China (a grouping of more than 130 developing countries in the UN) have instead been calling for a universal, intergovernmental negotiation process at the United Nations to address the international tax system where all developing countries can participate on equal footing.
However, OECD countries continue to block that call in the United Nations and instead are now finding “regional” entry points to promote these decisions with developing countries.
Redefining ‘regional cooperation’
The recent G20 Finance Ministers and Central Bank Governors Meeting communiqué mandated the OECD to identify areas where domestic resource mobilization efforts can be supported in the Asia-Pacific region in collaboration with the ADB Asia Tax Hub as a “top priority.”
It is deeply problematic that bodies such as the Group of Twenty and OECD are dictating regional priorities despite having no mandate from Asia-Pacific countries that are not members of G20 and OECD to do so.
This is further compounded by the fact that membership of some of these Asia-Pacific bodies already includes non-regional members. Of the ADB’s 68 members, 19 are outside of Asia and the Pacific. Similarly, the UN Economic and Social Commission for Asia and the Pacific (ESCAP) also includes members such as the US, the UK, France and the Netherlands.
For an issue as politically sensitive as taxation, the presence of non-regional members in such bodies risks undermining regional priorities, especially of developing countries in the region.
Indonesia as current G20 chair and India as the upcoming G20 chair should be upholding interests of developing countries in Asia instead of rubber-stamping the interests of OECD countries. Asian developing countries should reject this international tax cooperation agenda of the ADB tax hub, which is nothing more than a Trojan horse to promote biased OECD tax initiatives in the region.
We, as members of civil society and mass organizations from different countries in Asia and other regions, come together in recognition of the urgency of transforming our tax and fiscal systems to make them ‘work for people and the planet.’ These have to be reoriented to turn away from blind subservience to corporate, profit-driven interests and towards the peoples’ agenda for economic justice and social transformation. At a critical time when tax revenues are gravely needed to fund essential public services and meet sustainable development targets, anti-poor tax policies and illicit financial flows have only deepened widespread inequalities within and among countries in the world
Fighting for survival amidst multiple crises of health, joblessness, violence and exclusion has become the “new normal” for many communities and sectors in Asia, with 89 million more plunged into extreme poverty and an average unemployment rate of 20% across the region in 2020. The social toll of the COVID-19 pandemic continues to be heavy for many countries with over-capacitated health systems, lower school completion rates, increasing hunger and malnutrition resulting from inadequate government responses and weakened revenue generation.
The historical imperative to correct imbalances and fundamental flaws of tax and fiscal systems at the national and global levels is undeniable. We commit to strengthening our campaigns and collective struggles towards these demandsfor tax and fiscal justice:
- Tax the Rich, Not the Poor!
While the vast majority of peoples in Asia continue to struggle for health, safety, and decent work, a small minority wallow in unimaginable wealth. 41% of billionaires in the world can be found in Asia, with the highest share vis-a-vis other regions with 8% of high-net-worth individuals involved in the health and technology-related businesses. Their combined wealth is estimated at US$ 4.7 trillion. This staggering figure is vastly underestimated, as revealed by the Pandora Papers. The Pandora Papers extensively documented the blatant circumvention of national and global regulations by wealthy political and business elites in order to hide profits and assets in offshore jurisdictions with more lax regulations on corporate taxation.
We firmly believe that governments must proactively step in to ensure that the wealth of billionaires – socially generated through labor and natural resources of our countries – must not be allowed to accumulate without shared social benefits. That is only right and fair especially when the poor are forced to bear unjust tax burdens.
We demand that governments take measures to adopt tax policies that will ensure that all incomes and profits of corporations and elites from both productive and financial activities are taxed. We call on governments to institute a progressive tax on wealth and accumulated assets of high net-worth individuals, and for countries around the world to establish cooperative mechanisms to strengthen the effective enforcement of wealth taxes by plugging loopholes that allow for illicit financial flows of untaxed wealth.
- Make Taxes Work for Women and Other Marginalized Sectors
Across Asia, tax and fiscal systems are riddled with gender biases and discriminatory policies that deepen inequalities and reinforce economic and social exclusion. Taxation can be instruments for advancinggenderand economic justice only when these biases are firstaddressed.
Women face multiple and intersecting forms of discrimination, take on a disproportionate share of paid and unpaid care work, face heightened exposures to violence, and have to contend with unjust tax burdens.
Women’s share of unpaid care work went up as much as ten times more than men during the pandemic lockdowns when state responsibilities for children’s education and family health fell on women’s shoulders. Women’s vast contributions to economic activity through social reproduction are rendered invisible by governments and economic systems that narrowly focus on production. Women’s unpaid care work must be proactively recognized and redistributed by the state by strengthening public services and rewarded through the provision of tax credits and other support systemsfor women.
Despite spending a greater share of incomes on household necessities such as food, childcare, and privatized utilities, tax burdens disproportionately fall on women, especially those from poor and marginalized sectors. Tax systems that heavily rely on regressive taxes on consumptionsuch as Value Added Tax (VAT), Goods and Services Tax (GST), and excise taxes on fuel and other household necessities – rather than taxing wealth and income-- are regressive and unjustly burdensome for women and other marginalized sectors
Communities of indigenous and tribal peoples in many parts of Asia are often sites of corporations’ wealth extraction from their land and natural resources. Since many essential goods and services are out of reach in rural areas, regressive excise taxes on fuel and mineral products create additional barriers for access to transportation, cooking, and housing for these communities.
Workers from indigenous and tribal peoples in Asia are also 25% more likely to be employed in the informal sector, while those formally employed earn 18.5% less than non-indigenous workers. On top of landlessness and limited access to public services, workers from these marginalized backgrounds are forced to pay the same level of income taxes, contributing to higher rates of intergenerational poverty.
We believe that gender biases and other discriminatory policies in tax and fiscal systems must first be removed or corrected before taxation could be considered as a tool for advancing gender justice and reducing inequalities.
We must press upon governments to reclaim public control of essential social services, generate more public revenues and increase allocation of funds for public services, and rechannel funds away from debt servicing and militarization towards the provision of public services to ensure that people’s rights and needs are met.
The Pandora Papers estimate that profits of corporations and wealth of elites held in offshore accounts may be as massive as one-third of global GDP. Legal instruments of tax havens have prevented these illicit financial flows from being subjected to public scrutiny or taxation in developing countries where wealth is generated, and where corporate tax abuses significantly erode public revenues. We must strengthen financial transparency and accountability mechanisms, ensure the full disclosure of beneficial ownership, and strengthen civil society-led initiatives to hold governments enabling IFFs to account.
Tax competition in the region has heightened with governments’ economic “recovery” programs, as seen in recent initiatives to lower corporate tax rates and maintain liberal tax incentive regimes. These have opened several loopholes for corporate tax abuses by multinational corporations (MNCs) through trade mis-invoicing, profit-shifting to lower-tax jurisdictions, and taking advantage of overlapping fiscal regimes and tax treaties. To compel MNCs topay their just share, we must end tax competition in the region and globally by instituting a global minimum corporate tax rate of 25-30%, closer to the recommendation of the United Nations High-Level Panel on Financial Accountability, Transparency, and Integrity (UN FACTI), and will be beneficial to developing countries. We must also call on governments to conduct an audit of all tax treaties and incentives to ensure that all agreements are aligned with domestic resource mobilization targets to fund peoples’ urgent needs.
- Advance Tax Justice in the Extractive Industry!
The social, economic, and environmental impacts of the extractive industry have long been the focus of many community struggles and campaigns of people’s movements and civil society organizations. On top of the irreversible damages to the environment and in many cases to people’s health, the mining industry is also rife with corruption, tax abuses and other types of illicit financial flows.
Economic restrictions imposed by governments since 2020 have been utilized as smokescreens by mining corporations to expedite the approval of projects despite peoples’ resistance. Corporations in the extractives sector have historically benefitted from privileges of long-standing tax holidays and preferential fiscal regimes applicable to mineral resource extraction. Tax planning and avoidance of corporations, especially MNCs in extractive industries, result in massive erosion of public revenues and intense profiteering at huge costs to people, communities, workers, the economies and environment of Asian countries.
We must urgently institute and enforce tighter social, financial and environmental regulations and sanctions over the extractives sector; scrap tax incentives granted to extractives industries and curb illicit financial flows; impose resource taxes on the export of raw materials from mining and other extractivist activities; and uphold the rights of communities and women affected by mining and other extractivist activities, including their right to defend their communities.
- End Inequalities in global tax rules and rule-making! UN Tax Body Now!
Through the OECD-G7-G20 “tax deal of the rich,” the world’s richest countries and biggest economies are seeking to bind our tax systems in a more vicious race to the minimum as they benefit in a much greater degree from the proposed distribution of taxing rights and the meager global minimum tax rate of 15%. Digital services taxes (DSTs) proposed in the ‘tax deal of the rich’ also pose a risk of reproducing the regressive impacts of VAT in our countries as the costs will certainly be passed onto consumers. As peoples of developing countries that have long been impaired by the fiscal stranglehold of underfunded public services and regressive taxes, it is imperative for us to strongly reject these false solutions and urge our governments to take leadership in forwarding a just, progressive, and democratic alternative.
To meet peoples’ urgent needs, we need fiscal systems and global tax rules that serve to reduce the entrenched inequities and injustices of tax norms and rule-making on the national and global levels. Negotiations and decision-making on global tax rules must be done within the auspices of the United Nations, in a platform where all countries sit as equals and voices of civil society can hold governments to account. We reiterate our call for the establishment of an inter-governmental mechanism on tax matters – a UN Tax Body -- that is genuinely inclusive, democratic, transparent and accountable, where all countries sit at the table as equals and where the voices of the peoples of the Global South and of marginalised sectors, those who are most affected by inequalities in global tax rules, are heard.
- System Change, People First Before Profit!
We strongly believe that rebuilding broken tax and fiscal systems is an urgent task, but it cannot be achieved only through minor fixes and band-aid solutions such as those proposed in the “tax deal of the rich” and by international financial institutions like the International Monetary Fund (IMF) and the Asian Development Bank’s Asia-Pacific Tax Hub. Tax and fiscal justice can only be achieved by addressing fundamental flaws in tax and fiscal systems.
Our campaigns for tax and fiscal justice is grounded on a vision for economic justice and must serve a bigger fight for system change – for thoroughgoing changes and transformation of economic systems, of gender and class relations, as well as a fundamental restructuring of the relationship between production and the environment.
Our struggle for tax justice must also be integrated with a systemic shift away from extractivism – the exploitation, plunder and destruction of natural resources to the huge detriment of people, communities and the planet – which is primarily driven by corporations, especially MNCs, in collusion with local elites, governments, and international financial institutions (IFIs).
Our vision for economic justice is founded on a fundamental reorientation towards prioritizing peoples’ needs and a rejection of neoliberalism and unbridled capitalism, reclaiming the central role of governments and civil society in regulating market and social relations.
The call for governments to “Tax the rich, not the poor / Tax the billionaire, not the worker” reverberated in protest actions and activities staged by people’s organizations and movements in Asia on 21 January 2022, in solidarity with theGlobal Protest to Fight Inequality called by the Fight Inequality Alliance and with movements and CSOs in over 30 countries.
Protest actions in the region, including in Bangladesh, India, Indonesia, Pakistan and the Philippines,called attention to the urgency of reforming tax systems to end unjust tax burdens on the people and to sharply and justly tax the income and wealth of corporations and the elite in order to raise domestic revenues for public services and for people’s recovery.
Lidy Nacpil, coordinator of the Asian Peoples’ Movement on Debt and Development,notes that the multiple crises in Asia —health crisis, political repression, the impact of the climate emergency, and the economic crisis -- preexisted the pandemic but the pandemic has exacerbated the situation, exposing and widening social and economic inequalities.
Prior to the outbreak of the pandemic, an estimated 233 million people in Asia and the Pacific lived in extreme poverty, below the international poverty line of $1.90 a day. Another 1 billion people were trapped on incomes of less than $3.20 a day, the lower middle-income poverty line. Close to 2 billion lived on less than $5.50 per day. UN ESCAP estimates that up to 93 million additional people may have fallen below the $3.20 per day poverty line due to the impacts of the COVID-19 pandemic.
Meanwhile, billionaires thrive in the region. A recent report has found the wealth of the Asian billionaire class to be greater than the GDPs of Indonesia, Malaysia, Myanmar, Philippines and Thailand combined.
Nacpil decried the role of tax systems in many countries in Asia and other parts of the world in entrenching inequality. “We have national tax systems and an international tax architecture that put undue burdens on people -- on women, workers, farmers, fisherfolk, indigenous people, urban and rural poor, even young people. These burdens come in the form of a very regressive tax system. These tax systems put the greater weight of tax payments on poor and marginalized sectors and communities while the elites and biggest multinational corporations are given all kinds of tax breaks and commit tax evasion with impunity,” she said.
Massive profit shifting by MNCs and tax avoidance and evasion by the elite, Nacpil said, results in staggering amounts of revenue losses for public coffers, a major factor driving the underfunding of public services. The social, economic and environmental costs of these tax abuses by MNCs and the elite are borne by the vast majority of ordinary people, she added.
“A system where the unbridled accumulation of wealth and profit by a select few is enabledat the expense of the needs and rights of the many, is gravely and fundamentally unjust,” pronounced Nacpil.
According to a report published on January 19 by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam, and Patriotic Millionaires, a tax based on the market value of assets owned by multi-millionaires and billionaires could also “generate enough revenue to make enough vaccines for the entire world and fill financing gaps in climate measures, universal health and social protection, and efforts to combat gender-based violence in over 80 countries.”
The report also points out that an annual wealth tax in Asia would raise US$673.74 billion a year (with rates at 2% on wealth over $5 million, 3% on wealth over $50 million and 5% on wealth over $1 billion).Such a wealth tax applied to the wealth of multi-millionaires and billionaires would raise $673.74 billion a year, enough to increase public health expenditure in the region by 62%.
Actions to #FightInequaity
In Pakistan, protest actions, children’s art exhibit and debate competition and other activities were held, led by FIA, Pakistan KissanRabita Committee (PKRC), and Crofter Foundation, in 10 cities: Lahore, Karachi, Larkana, Faisalabad, Toba Tek Singh, Rawalpindi, Shadadkot, Mardan, Multan,and, Dera Ismail Khan.
(LINK BANGLADESH statement)
“Nearly half of the population live below or around the poverty level, not earning enough to make ends meet. Millions of workers in construction, retail, wholesale, transport, agriculture and informal sectors earn much lower than required to pay income tax. Nearly 77 percent of women are not active in the formal economy. Even then they are paying the imposed indirect taxes. How can they be asked to pay taxes when they find it difficult to feed themselves?” said Saima Zia of PKRC.
In the Philippines, coordinated actions were staged in 10 cities and municipalities in the major islands of Luzon, Visayas, and Mindanao. The actions denounced the botched response of the Philippine government to the multiple crises in health, livelihoods, climate, and human rights. Speakers and participants demanded an end to unjust tax burdens on people, pointing out that tax revenues should be used for people’s needs. They also called for the adoption of a wealth tax and recovery of ill-gotten weath of billionaires to raise more revenues to fund public services.
With the theme “Indak, Sayaw, Piglas Para sa Ayuda, Proteksyon, Trabaho – Kahirapan, Wakasan! Kayamanan, Buwisan!” (Move-Dance-Struggle for Relief, Protection, Work/ End Poverty, Tax Wealth!), protesters conveyed their demands through music, dance, testimonies and speeches from some of the most affected and marginalized sectors. Addressing the tax abuses of corporations and billionaires, they sang out a sharp warning, “We will tax YOU!” The outdoor action in Quezon City gathered more than 300 participants and was led by the Freedom from Debt Coalition, Sanlakas, Bukluran ng Manggagawng Pilipino (BMP), the women’s group Oriang, Aniban ng mga Manggagawa sa Agrikultura, Kongreso ng Pagkakaisa ng Maralitang Lunsod with APMDD.
In Bangladesh, a human chain demonstration demanding tax justice was staged in front of the National Press Club. Badrul Alam, president of Bangladesh Krishok Federation, said that due to lack of proper tax management, the owners of big domestic and foreign companies get away with tax evasion and smuggling the country’s wealth overseas. “Tax management needs to be for the public interest. It is time to formulate a progressive tax management,” he said.
Some 250 men and women from the Bangladesh Sramik Federation, Bangladesh Bhumihin Samiti, Bangladesh Krishok Federation, Bangladesh National Labor Federation, Ready Made Garment Workers' Federation, Jago Bangladesh Garment Workers Federation, and,Motherland Garments Workers Federation, tribal leaders and students joined the mass gathering.
Speakers called upon the government to bring back about US$1.1 trillion smuggled outside the country and use the money for services and development projects. They challenged government to formulate a budget on the basis of the policy of 'taxing the rich, not the
In Indonesia, protest actions were held in seven villages spanning three islands -- Bali, Java and Sumatra -- between January 15-22. Food hawkers in one of the last traditional markets in East Jakarta protested the government's plan to tax nine basic food items and the uncontrolled inflation.Protesters in Wadas, Central Java put up mural installations on the impact of a hydropower project. Peasants in Lampung, Sumatra took up high living costs and land inequality.
There were physical and online consultations in Pakel, East Java; Indramayu, West Java; Mount Wayang, West Java; Bali and Jakarta. Pakel is a village fighting to reclaim the working land, a 1000 year-old fight. The community in Indramayu is fighting against coal power plant, including Cirebon.Women leaders in the MuaraBaru urban village in North Jakarta, known as the most marginalized in the country, held several meetings to strategize towards engaging the national government on evictions, the right to water, among other issues. KRuHA, Women Forum for Social Justice, and the Household Assistant / Housemaids Union work together in the area.
In India,where the wealth of Indian billionaires has more than doubled during the pandemic while 46 million people are estimated to have fallen into extreme poverty in 2020 (nearly half of the new global poor),“Rising Inequality” was the focus of a discussion-forum with Dalit activist and intellectual P. Deekaiyya, feminist thinker Vani Periodi and writer Shoukath Ali, at the open amphitheater of the School of Social Work RoshniNilaya in Valencia, Mangalore. Organized by the Citizens’ Forum for Mangalore Development and led by Vidya Dinker and friends, the gathering brought together around 70 activists, thinkers, grassroots leaders keen to fight inequality.
Nacpil called for intensified campaigning to advance a comprehensive set of demands for tax and fiscal justice, stressing the urgency of ‘transforming our tax and fiscal systems to make them ‘work for people and the planet.’ APMDD’s statement issued on 18 January 2022, A People’s Manifesto: Make Taxes Work for People and the Planet,” summarizes these demands, building on the analyses and positions articulated by APMDD and its members and partners in various actions and consultations on tax and fiscal justice:
A People’s Manifesto advances the following demands:
• Tax the Rich, Not the Poor
•Make Taxes Work for Women and Other Marginalized Sectors
•Reclaim public services; increase and mobilize public funds for fulfilling peoples’ rights and needs!
•Make MNCs Pay Their Share! Stop Corporate Tax Abuses and Other Illicit Financial Flows (IFFs)
•Advance Tax Justice in the Extractive Industry
•End Inequalities in global tax rules and rule-making
•System change, People First Before Profit!
The week of protest kick-started with an activity with labor groups in the Philippines on 16 January with some 150 workers, including leaders from 13 unions in Metro Manila, participating in the event. Held in Valenzuela City under the banner theme, “Workers Unite to Fight Inequality!” and organized by APMDD and the Bukluran ng Manggagawang Pilipino (Solidarity of Filipino Workers) it amplified the workers’ call on the Philippine government to #TaxTheRichNotThePoor.
Discussion groups, press conference, and other ‘build-up’ activities, including a webinar by APMDD on 18 January, were also held during the week, in the lead up to the actions on 21 January.
MANILA, 26 November 2021- Tax justice and human rights activists today trooped to the Department of Finance to protest the undue tax privileges given to and the tax abuses of mining corporations.
“Are you truly Santa?” they sang to the tune of “Santa Clause is Coming to Town,” in reference to the privileges given by government to mining corporations on the pretext that mining contributes significantly to the economy and the communities where they operate. In April, the Duterte government lifted a 9-year ban on issuing new mining licenses and rationalized incentives to the extractive industry.
Luke Espiritu, president of the Bukluran ng Manggagawang Pilipino (BMP), said the Department of Finance (DOF) should be working toward progressive taxation and stop championing elite and corporate interests.
“While the world is still coming to terms with the effects of the coronavirus pandemic and the urgent challenge of economic recovery, it has been “business as usual” for the extractive industry’ and some of its shady operations. Mining corporations are raking in huge profits even under COVID-19 restrictions on most other economic activities,” he said.
BMP was among groups who held a rally in front of the Bureau of Internal Revenue against tax abuses of mining corporations on November 19. They put the spotlight on a corporation wholly owned by APEX Mining, one the most profitable companies in the Philippines, that has been exposed for profit shifting in the Pandora Papers, the large-scale investigation conducted and published by the International Consortium of Investigative Journalists through a team of journalists from 150 news outlets in 117 countries. The Pandora Papers mentioned several prominent Filipino names and families.
“Workers are squeezed dry, work in very bad conditions for very minimum wages, but the government only watches out for business. Government only provides corporations with even more relief from paying direct taxes. This effectively reduces potential revenues for public coffers – precious resources needed especially at this time of pandemic and economic crisis,” Espiritu said.
“Baliw. (Mad.) This government is mad in charging mining corporations very low taxes and giving them free rein with our gold, nickel, and copper,” Espiritu said. He lamented that mining corporations are even allowed by government to form their own private armies.
Sanlakas secretary general Atty. Aaron Pedrosa noted that the extractive sector is booming, For the first half of 2021 alone Nickel Asia earned ₱2.73 billion, a 579% jump from the same period last year; Atlas Mining gained a net income of ₱1.9 billion; and, Semirara Mining almost tripled its net income to ₱6.28 billion from ₱2.2 billion last year.
“Mining is touted to be a driver of our economic recovery but far from it, we are only seeing its recovery as mining companies rake in super profits,” he said, adding that the government is complicit in fueling the setup as “it is overly generous to business, providing guarantees, fiscal and non-fiscal incentives for decades."
Incentives include, under FTAA (Financial or Technical Assistance Agreement), incentive for Income Tax-Carry Forward of Losses; incentive for Income Tax-Accelerated Depreciation; Amortization of Exploration and Development Expenses; and, Incentives for Expansions and Modifications to Existing Facilities and for Development of New Mineral Resources.
He added that the DOF has engineered a series of tax reforms under the guise of ‘rationalizing corporate tax incentives’ that escalates the reduction of corporate income tax rates. “This follows the global trend of ‘racing to the bottom’ of minimum corporate tax rates to provide the most profitable business environment for corporations. By DOF’s own admittance, for the first time in Philippines’ recent history, it has promoted a revenue-eroding tax reform in the CREATE law,” he said.
Flora Santos, president of Oriang, castigated Dominguez’s recent statement rejecting the legislative proposal for a wealth tax. “Our people are going hungry, but this government continues to rely on regressive taxation. For poor people, this means high prices for some of their most basic necessities. We pay VAT for almost everything we consume but get no services from this government, not even for the most essential needs for health care and housing.”
Meanwhile, Lidy Nacpil, coordinator of the Asian People’s Movement on Debt and Development (APMDD), expounded on the Global Days of Action on Tax Justice in the Extractive Industry in a virtual press briefing that followed the rally. “This is part of the effort globally led by many groups and movements to expose the abuses of multinational companies, particularly mining companies, and counting among the abuses is not just abuse of labor, abuse of the environment, but also abuse of taxes,” explained Lidy Nacpil, coordinator of APMDD.
“We know that mining companies are earning trillions of dollars worldwide and most mining companies are multinationals operating in many countries. One of the ways that they ensure huge profits is to avoid and evade taxes and to court governments to provide tax incentives for them based on a myth on the benefits of their operations. It is a myth because it has been proven that mining does not really add to the real economic benefit for people and communities in our countries,” she added.
The Global Alliance for Tax Justice (GATJ) called for Global Days of Action for Tax Justice in the Extractive Industry on 25-26 November noting that “While the world grapples with the continuing impacts of the pandemic and the urgent challenge of economic rebuilding, it is ‘business as usual’ for the extractive industry. Considered an essential service in many parts of the world, its operations have been exempt from lockdown and other restrictions. It continues to benefit from tax incentives regimes, accumulating wealth and profit for conglomerates and elite countries where they are registered. From the Swiss leaks to the Paradise Papers, and the most recent expose, the Pandora Papers, the extractive industry has been linked to the layers of financial secrecy that produce illicit financial flows and the web of tax havens that enable massive profit shifting and systematic tax avoidance.”
The extraction of natural resources in many countries in Asia has long served as a foundation for the concentration of wealth and power in the hands of a few -- at the expense of communities, marginalized sectors, and the environment. Our shared experiences of large-scale mineral extraction under colonial occupation and the neoliberal drive of governments to attract foreign investments in extractives are deeply intertwined with a long history of peoples’ struggles for lands, livelihoods, and human rights in mining-affected communities across the region. These are also part of a continuing history of labor exploitation and sustained and systematic transfers of wealth, natural resources, indigenous knowledge, and other assets from the Global South to the Global North. A situation that has produced immense, profoundly immeasurable social and ecological debts owed to the peoples of the Global South.
Multinational corporations in the extractive industry and their shareholders from local elites have enjoyed long standing guarantees of profit accumulation from ownership and control of vast mineral, oil and gas reserves, boosted by generous fiscal and non-fiscal incentives. Where the collusion of corporate and elite interests dominate politics and policymaking, the capacities and political will of governments to fulfill their human rights obligations, climate commitments, and sustainable development goals are severely undermined and eroded.
The multiple crises of health, economic recession and climate emergency present us with the urgent challenge and unique opportunity to chart a different path and reject economic policies and development paradigms that harm people and the planet. It is thus alarming when governments and international actors look uncritically at the extractive industry as part of the ‘solution’ to economic development challenges without regard for its links to illicit financial flows, human rights abuses and the climate crisis. Environmental abuses and other unjust practices of the extractive industry must be stopped; the flaws and loopholes in national and international tax systems that enable mining, oil and gas companies to shift profits, practice systematic tax avoidance, and enjoy generous tax incentives, must be corrected.
On November 26, 2021, the Asian Peoples’ Movement on Debt and Development (APMDD) joins advocates and allies on the Global Day of Action on Tax and Extractives to demand accountability for human rights and environmental abuses, to advance tax justice by transforming mining fiscal regimes, and to call on governments to make taxes work for people and the planet.
The multiple crises experienced by mining-affected communities amidst the global pandemic exposed the continuing crimes of mining corporations against peoples of Asia. In India, hazardous working conditions and underpayment of wages are persistently reported by workers in coal mines, whose toxic fumes were also proven to weaken respiratory health and increase vulnerability to COVID-19 of surrounding communities. In Indonesia, the government introduced several reforms to the Mining Law that granted automatic permit extensions and expanded the scope of tax incentives enjoyed by the mining sector despite reports on the heightened vulnerability of over a hundred mining-affected communities to natural disasters. In the Philippines, the government lifted the nine-year restriction on mining licenses, thus allowing the continuation of human rights and environmental destruction without consequence.
These incidents illustrate a very bleak picture of mining’s impacts on communities in Asia. Women in mining-affected communities are likewise facing additional threats to their livelihood and obstacles in accessing necessities such as water and food due to displacement of communities and degradation of natural resources. Mining corporations and state forces have also taken advantage of lockdown restrictions to violently bear down on the resistance of indigenous tribes and other marginalized sectors, deepening the accumulation by dispossession of lands and suppression of their rights to defend their communities from encroachment. Despite the risks and impacts faced by workers, women, and indigenous peoples, profits gained by mining corporations have skyrocketed in 2021 to higher than pre-pandemic levels.
Amidst widespread exploitation and abuses on human rights and the environment, governments have reinforced the regulatory stranglehold of the mining industry through tax and fiscal regimes that grant a range of incentives, treaties, and agreements exclusively offered to mining corporations, usually lasting more than a decade. Embedded in fundamental Mining and Investment codes of many Asian countries are several loopholes for mining companies to pay meager revenues far below baseline corporate tax rates. Massive discrepancies between profits generated by the mining industry and their paltry tax contributions reveal the magnitude of foregone revenues. This staggering revenue loss sharply undermines domestic resource mobilization in countries that direly need to rebuild essential public services that have been crippled by decades of privatization and urgency of pandemic-related social demands.
On top of fiscal incentives and legalized instruments enabling tax avoidance, mining corporations deliberately take advantage of several gaps in the broken global tax architecture, financial secrecy through tax havens, and corporate restructuring to engage in aggressive tax planning and reduce tax obligations to national governments. Legislative lobby groups of mining corporations actively plan around tax competition in Asia and globally, especially in levies specific to the mining sector such as royalties, processing and export taxes. These underline the importance of the voices and demands of resource-rich developing countriesin pushing for an inclusive, democratic, and transparent intergovernmental body on global tax rules under the auspices of the United Nations.
Our demands for accountability from mining corporations and governments to address peoples’ urgent needs are nevertheless rooted in the recognition that reforms in tax regimes and stricter regulations on labor and human rights are still fundamentally inadequate to address the destructive intergenerational impacts of large-scale mining on the environment and local communities. Threats to biodiversity and livelihoods, displacement, and climate impacts will continue to encroach upon peoples’ welfare and further threaten the planet’s future as long as economies remain heavily reliant on natural resource extraction for production and commodity exports. Because of these impacts inherent in the continuation of large-scale mining activities, governments in Asia must profoundly rethink industrial policies that regard extractivism as a pillar of development. We must progressively shift away from economic systems that prioritize profits of mining corporations and embedded interests of political elites over the urgent demands of mining-affected communities, workers, women, and other mining-affected sectors, and the people’s demands for just, sustainable, equitable and democratic economies.
We demand governments in Asia to:
1. Tax the Rich, not the Poor!Address the biases of tax systems that favor elite interests and impose unjust tax burdens on the people. Stop corporate tax abuses and all forms of illicit financial flows! Strengthen and enforce financial transparency mechanisms. Work for a truly inclusive, democratic, transparent and accountable intergovernmental mechanism for governance on international tax matters under the auspices of the United Nations.
2. Advance tax justice in the extractive industry!Make mining companies and MNCs pay their fair share of taxes. Probe and sanction tax abuses of mining corporations.
3. Stop the exploitation and abuse of workers in the mining and extractives industry. Uphold the rights and promote the welfare of all marginalized sectors and communities affected by the mining industry.
4. Stop environmental destruction and other abuses of mining companies!Make mining companies pay for reparations and ecological restoration.
5. Put an end to economic dependence on natural resource extraction by working towards system change and transforming our deeply extractivist economies towards a peoples’ vision of sustainable, just, equitable and democratic economies that prioritize people and planet over corporate greed and profit-driven elite interests.
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