Tax flight kills mothers

A nurse in training at the Mzuza General Hospital in Malawi.
18.6.2019
Political article
Fiscal policy is a matter for a few – generally male – insiders divorced from reality. But it turns out, particularly from a gender equity standpoint, that tax policy entails negotiating the most elementary things in life.

Fiscal policy is – to put it mildly – something rather abstract. What with all the "regular tax rates", "assessment bases", "automatic information exchange", "profit shifting", "registers of beneficial owners", "country-specific reports" or – PricewaterhouseCoopers, deliver us from such evil – "interest-adjusted profit tax", it is easy to forget that at bottom, fiscal policy revolves around people’s very immediate needs. For example, the fact that every child – whether boy or girl – everywhere in the world should have the greatest possible access to the elementary services that make possible a life of dignity: good health care, a decent education, safe public transport and infrastructure, and participation in culture, politics and society.

There are also times when fiscal policy is quite simply a matter of life and death. For example, when somewhere in the world a mother dies during childbirth because the public hospital in which she tried to have her child is poorly equipped. According to the 2018 edition of World Health Statistics, an annual publication of the World Health Organization (WHO) with data for health-related Sustainable Development Goal (SDG) indicators in the Framework of the UN 2030 Agenda, for the year 2015 alone, 303,000 women died from birth or pregnancy-related health complications. Of these women, 99 per cent died in countries classified by the WHO as low or middle income countries. Almost two-thirds of them, or 62 per cent, died in sub-Saharan Africa. In Switzerland, five women die per 100,000 births, in Ghana, the figure is 319 and in Nigeria 814. The picture is not much better for infant mortality. In Switzerland, only four of every 1000 infants die at birth, in Ghana that figure is 35, and in Nigeria 70. Ghana and Nigeria are not among the world's poorest countries. Ghana is held up by the international community as a model African country owing to its political stability, while Nigeria is regarded, despite a civil war in the east of the country, as an up-and-coming economic location. Despite this, maternal and infant mortality rates in these countries are several times higher than in European countries. According to the WHO, most of these deaths could be prevented with adequate medical equipment.

Safe birth is a privilege

The UN 2018 progress report on SDG 3 of the 2030 Agenda ("Ensure healthy lives and promote well-being for all at all ages") states that since 1990, the worldwide maternal mortality rate has fallen by 37 per cent and that of infants by about 39 per cent. Yet a relatively safe birth for mother and child remains a privilege reserved to a small percentage of the world's population. Against this backdrop, UN Member States agreed in 2015, through Goal 3 of the 2030 Agenda, to reduce worldwide maternal mortality to less than 70 deaths per thousand births by 2030 and infant mortality to 12 per thousand births.

Although these are modest and ultimately arbitrary targets when measured against the figures given earlier – they will not be achievable without fiscal reform in many developing countries, in low tax jurisdictions and throughout the world. The fact is that for the vast majority of the world’s people, access to medical care depends entirely on the quality of the public health services available in the places where they live – and that quality in turn depends on the fiscal revenue that enables a community to ensure adequate health care for mother and child.

In most developing countries, mobilizing fiscal resources for public services is an extremely precarious undertaking. In the poorest ones, tax revenues average just about 15 per cent of gross domestic product (GDP). This is much less than in the rich countries of the OECD (Organization for Economic Cooperation and Development), where tax revenues account for roughly 34 per cent of GDP and, according to International Monetary Fund (IMF) estimates, 15 per cent is too little to ensure a functioning State. One of the principal reasons for this huge discrepancy in the mobilization of fiscal revenues between developing and OECD countries is the outflow of substantial personal wealth and company profits to low tax jurisdictions, from where corporations and asset managers conduct their worldwide operations. The consequences are disastrous: the Washington think tank Global Financial Integrity (GFI) estimates that in 2014, developing and emerging countries alone lost US$ 1 trillion through what are commonly called illicit financial flows. It is developing countries that are mainly footing this bill. Wealthy OECD countries too experience substantial outflows of taxable funds. But because many of them – not just notorious tax havens like Switzerland – also have a variety of tax loopholes, flight capital is also re-entering those countries. Developing countries for their part generally lack the wherewithal to intervene in the competition between States for the proceeds of tax avoidance.

But it is not only in the health sector that the recognized fundamental rights of girls and women are being curtailed for fiscal policy reasons. Wherever public commitment and financial resources are needed to overcome structural gender discrimination such as in education or on the job market and to develop new forms of gender-equitable coexistence, the rights of women and girls are the first to fall by the wayside. The struggle for gender justice is therefore invariably also a struggle for tax justice and adequately funded public services – and vice versa. This rings all the more true when this struggle is being conducted from Switzerland, with a global eye for the economic structures underlying discrimination against women and girls. Despite all the fiscal policy reforms of recent years, Switzerland remains the biggest offshore financial centre and one of the leading trade and capital hubs for multinational corporations from around the world. Profits are therefore being taxed in this country, having been generated elsewhere and representing fiscal income foregone in those places – with potentially catastrophic consequences already at the very start of each human life.