Naomi Fowler ■ UN criticises Switzerland and pressure mounts over human rights impacts of tax havens
Following a landmark submission on Swiss responsibility for the extraterritorial impacts of tax abuse on women’s rights, presented by CESR, Alliance Sud, the Global Justice Clinic at NYU School of Law, Public Eye and the Tax Justice Network, the UN Committee mandated to oversee compliance with the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) criticized Switzerland earlier this month for the potentially negative women’s rights impacts of its financial secrecy policies. As further testament of the growing consensus among UN experts that tax havens present a serious threat to human rights, the CEDAW Committee called on Switzerland to undertake impact assessments of the effects of its financial secrecy and corporate tax policies on women’s rights overseas.
As detailed in a fact sheet co-authored by CESR, low and middle income countries lose huge volumes of revenue each year as corporations and wealthy individuals avoid paying their fair share of taxes by shifting their funds to countries like Switzerland, where they can be held in secret, taxed at very low rates, or exempted from taxation altogether. Tax dodging by multinational copper firms such as the Swiss-headquartered Glencore in Zambia, for example, may amount to as much as $326 million annually, equivalent to about 60% of the country’s health budget. In India, meanwhile, just one Swiss bank helped high-net-wealth individuals dodge taxes at a cost of between $492 million and $1.2 billion in direct tax revenue; this reflects 44% of the India’s expenditure on women’s rights and 6% of the total social sector expenditure in 2016.
These lost tax revenues are essential for the fulfillment of fundamental human rights. When government coffers are drained, the resultant cuts in public services and social protection programs hit women hardest, as they are often forced to fill service gaps with their unpaid care work. When wealthy individuals and corporations avoid paying their dues, women also bear the brunt of states’ increased dependence on consumption taxes.
As a party to CEDAW, and an avowed advocate of the recently-adopted Sustainable Development Goals, Switzerland has committed to avoiding policies that are detrimental to the rights of women, whether at home or beyond its borders. It is likewise obliged to prevent private sector conduct that might undermine women’s rights extraterritorially by helping to prevent corporate tax abuse and enable other countries to raise and retain revenues needed to fulfil human rights.
In July, when it appeared before the UN forum monitoring implementation of the Sustainable Development Goals, Switzerland committed to take part in “a coordinated international effort to eliminate the causes of illicit financial flows.” The Swiss Federal Council went on to publish a detailed study confirming the nefarious impacts of illicit financial flows on developing countries.
Yet, astoundingly, the government has refused to conduct an independent assessment of the ways in which its own policies—in particular its bank secrecy laws, criminal prosecution of whistleblowers, weak corporate reporting standards and tax privileges for multinational corporations—provide fertile ground for tax abuse overseas.
While welcoming the Swiss Federal Council report, the CEDAW Committee’s Concluding Observations expressed concern that “the State party’s financial secrecy policies and rules on corporate reporting and taxation have a potentially negative impact on the ability of other States, particularly those already short of revenue, to mobilise the maximum available resources for the fulfilment of women’s rights”. Directly echoing the recommendations made by CESR and its partners, CEDAW urged Switzerland to honor its international human rights obligations by “undertaking independent, participatory and periodic impact assessments of the extraterritorial effects of its financial secrecy and corporate tax policies on women’s rights and substantive equality, and ensuring that such assessments are conducted in an impartial manner with public disclosure of the methodology and finding.”
CEDAW’s recommendations to Switzerland come amidst increasing efforts by human rights and tax justice advocates to prompt the international human rights system to hold governments accountable for the human rights impacts of their tax and financial policies, both within and beyond their borders. In June 2016 the UN Committee that monitors economic, social and cultural rights called on the UK to address the human rights impacts of its financial secrecy policies, while in May the UN Committee on children’s rights recognized the importance of combating tax evasion as a way to mobilize resources for fulfilling children’s rights. Various human rights experts, including the UN Special Rapporteur on Extreme Poverty and the UN Independent Expert on Foreign Debt, have also urged tax havens to change course if they are to remain human rights-compliant.
As pressure mounts for a UN General Assembly resolution to stamp out tax havens, it has become clear that governments who insist on eroding the tax bases of other nations will face increasing scrutiny from human rights accountability mechanisms. The ground-breaking outcomes of CEDAW’s review of Switzerland indicate what can be achieved when human rights and tax justice advocates join forces to use these mechanisms to challenge cross-border tax abuse as a violation of human rights.
- Joint submission to UN Committee on the Elimination of All Forms of Discrimination Against Women: Swiss Responsibility for the Extraterritorial Impacts of Tax Abuse on Women’s Rights
- Factsheet: State Responsibility for the Extraterritorial Impacts of Tax Abuse on Women’s Rights
- CESR: Human rights in Tax Policy
- CESR: Switzerland
- OpenGlobalRights debate (curated by CESR): Economic Inequality: Can human rights make a difference?
The Tax Justice Network May 2021 Spanish language podcast, Justicia ImPositiva: Histórica huelga en Colombia, mínima tasa global #59
The Tax Justice Network’s French podcast: 63% des dépenses budgétaires contre la Covid-19 ont bénéficié à de riches entreprises #27
From an un-caring economy to a caring economy: the Tax Justice Network podcast, April 2021
Poor pushed aside as corporates pocket pandemic funds in developing countries
The Tax Justice Network’s French podcast: En République Démocratique du Congo: les exonérations fiscales privent les populations des services essentiels #26
Chile – Submission to UN Committee on the Elimination of Discrimination against Women
1 March 2021