Why MES with HUMAN RIGHTS?

Integrating Macro Economic Strategies with Human Rights

Project Aims and Objectives

To pilot a process of analysis, development of policy recommendations, and capacity building that promotes the realization of economic and social rights at the country level, with particular attention to addressing the disadvantage associated with gender, class, race and ethnicity.

To foster and develop synergies between human rights and progressive political economy approaches.

To develop methodologies for evaluating macroeconomic policy from a human rights perspective to progressively realize the economic and social rights and to meet the minimum core obligations.

To develop the capacities of civil society and government organizations to draw upon both human rights norms, standards, obligations and procedures and the analytical and policy development tools of progressive political economy and enhance citizen’s capacities to evaluate and monitor governmental action.

(1) fiscal policy (2) public expenditure (3) taxation (4) monetary policy (5) international trade(6) regulation: pension reform

The project examines six aspects of macroeconomic policy:

Human Rights Instruments

Universal Declaration of Human Rights (UDHR Convention on the Elimination of All Forms of

Racial Discrimination (CERD)International Covenant on Civil and Political

Rights (ICCPR)International Covenant on Economic, Social and

Cultural Rights (ICESCR). Convention on the Elimination of All Forms of

Discrimination Against Women (CEDAW) Convention on the Rights of the Child (CRC)

Clarification of human rights obligations

The obligation to respect requires states to refrain from interfering with the enjoyment of economic, social and cultural rights.

The obligation to protect requires States to prevent violations of such rights by third parties.

The obligation to fulfil requires States to take appropriate legislative, administrative, budgetary, judicial and other measures towards the full realization of such rights.

The obligation of conduct requires action reasonably calculated to realize the enjoyment of a particular right.

The obligation of result requires States to achieve specific targets to satisfy a detailed substantive standard.

States must pay regard to the following key points

requirement for progressive realization use of maximum available resources avoidance of retrogression minimum core obligation for satisfaction of

minimum essential levels non-discrimination and equality participation, transparency and accountability

Evaluating Economic Policies In the Light of Human Rights Obligations

Policies: public expenditure, taxation, fiscal and monetary policy at the macroeconomic level, international trade, and regulation of non-state actors, using the case of pension reform

Key Question: How has policy been conducted- has it consisted of action ‘reasonably calculated to realize the enjoyment of a particular right’, selecting rights which might reasonably be thought to have a strong relation to the policy instrument?

Methods: Quantitative indicators plus qualitative examination of relevant legislation and policy processes

Cross-check the analysis of conduct with a quantitative and qualitative analysis of relevant ‘results’ for the relevant rights

Public Expenditure and ES Rights in the United States

Minimum Core Obligations – Obligation of Conduct

Resource allocation and structure of entitlements must be designed with the aim of guaranteeing the population with the enjoyment of minimum essential levels of ES rights.

Applying an adequate standard of living overall as well as to specific rights.

Is there an entitlement to the minimum essential level of food?

Obligation of Conduct:Food Assistance Programs

Food Stamp Program School Lunch Program (Free and Reduced-Price Components) Special Supplemental Nutrition Program for Women, Infants, andChildren (The WIC Program) Child and Adult Care Food Program (Lower-Income Components) School Breakfast Program (Free and Reduced-Price Components) Nutrition Program for the Elderly The Emergency Food Assistance Program (TEFAP) Summer Food Service Program Commodity Supplemental Food Program (CSFP) Food Distribution Program on Indian Reservations (FDPIR) Farmers’ Market Nutrition Programs Special Milk Program (Free Segment)

Minimum Core Obligations – Obligation of Result

There should be no section of the population that is deprived of minimum essential levels of enjoyment of ES rights.

Is basic nutrition of the most deprived people improving?

Source: U.S. Department of Agriculture (USDA), Economic Research Service, Household Food Security in the United States, 2005

Food Insecurity & Hunger, 2005

Source: Food Research and Action Center ’s analysis of USDA Food Report.

Public Expenditure and ES Rights in Mexico

ICESCR Principle: Progressive Realization and Non Retrogression

Obligations of Conduct –

States should use public expenditure –social expenditure, in particular– in the service of human rights.

How to form a judgment?

Ratio of public expenditure (especially social expenditure) to GDP over time. Has it increased or decreased?

Ratio of public expenditure to GDP comparing with countries in similar rank of development. Is Mexico spending less or more than its peers?

What are the amounts allocated to specific rights, such as the right to health and education? And, is the share increasing or decreasing over time?

Source: OECD, Country Statistical Profiles, 2007. On line, www.oecd.org

Public Social Expenditure in Mexico as % GDP

0

1

2

3

4

5

6

7

8

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

Per

cent

age

Evolution of public social spending in Mexico 1985-2003

Source: ECLAC, Statistic and Social Indicators 2007.

Public Social Expenditure as % GDP (2004)

0

10

20

30

40

50

Country

Per

cen

tag

e

But…how does Mexico compare with other LAC countries?

Obligations of Result –

This obligation can be measured by the realization of specific human rights related to each kind of expenditure.

An array of indicators of well being outcomes for specific rights, such as education, health, food, access to water, etc. is required. In general, are average levels of well being improving or deteriorating?

It is important to disaggregate by sex, age, class, and ethnicity as much as existing data allows, and to urge national governments to collect and distribute disaggregated economic data.

Source: ECLAC Statistic and Social Indicators 2007.

Maternal mortality rates LAC (2000)

0

50

100

150

200

250

300

Brasil CostaRica

Cuba Chile Mexico Panama LAC

Country

MM

rat

e (p

er 1

00,0

00 b

orn

al

ive)

Taxation and ES Rights in Mexico

Integrating Macroeconomic Strategies and

Human Rights – A Case Study: US and Mexico

Taxation in Mexico: an overview Low tax to GDP ratio – 10% in 2004 Tax base is narrow Tax collection is too low Numerous tax exemptions and special regimes High level of informality ın the economy Systems for generating public information are

weak Low reliance on corporate and income taxes

and social security contributions, high reliance on good and services taxes (55% of total revenue, highest in the OECD)

Tax revenue in OECD countries, America and Mexico, 2004 (% of GDP)

12.7%

3.8%1.9%

3.1%4.8%

2.1%

1.4%

1.8%

6.7%

6.7%

3.9%

5.7%4.1%

3.8%

1.8%

2.9%

2.3%

1.0%

1.8%

2.4%

2.0%0.7%

0.2%

0.4%

0.5%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

OCDE South America Central America Latin America Mexico 2006/p

Ta

x r

even

ue

% o

f G

DP

Income tax Other direct taxes VAT IEPS Other indirect taxes

Source: Ministry of Finance, Mexico (2007)

Taxation and ES Rights in Mexico

Case study: Mexico. Using the following principles inherent to economic and social rights:

Maximum available resources Non-discrimination equality Transparency, and accountability

and participation

Non-discrimination and equality

Obligation of conduct : to ensure that tax laws and collection measures do not discriminate.

Do the income tax rules discriminate on the basis of gender, sexual orientation, types of household, citizenship, or civil status? Are there tax loopholes that benefit the rich and enable them to move their resources overseas? Are taxpayers of all social groups treated equally in the implementation of tax laws?

Non-discrimination and equality – what the data say – Obligations of Conduct (VAT)

Lowest income population – 45.8% of their income in food and medicines, highest income population - 11.7%

Special treatments on VAT represent a high subsidy for the highest income population

People in the highest income decile pay only 6.4% of VAT collection and people in the lowest income decile pay 11.4%

VAT ıs regressive– rules on VAT exemption seem to be manipulated by business and producers to avoid payment

Decil Percentage of

Total Collection

Net Payment wrt

personal income

(%)

Including Exempted

Products as part of

Income (%)

I 1.451 11.4 5.221

II 2.367 10.7 4.890

III 3.339 10.4 5.053

IV 4.256 10.0 5.069

V 5.563 9.3 5.30

VI 6.969 9.0 5.371

VII 8.955 8.6 5.527

VIII 10.923 8.8 5.310

IX 15.291 8.1 5.181

X 40.887 6.5 5.774

Source: ENIGH, 2002

VAT INCIDENCE

Taxatıon and ES rıghts

TAX REFORM 2007

What are the implications in terms of equality and human rights?

“…the best tax is that levied on a foreign national living outside the country…”

Taxation and Human Rights in the United States

There is widespread agreement that maximum available resources does not just depend on the size and structure of

the economy and its rate of growth. It also depends on how the state mobilizes resources to fund its obligations. Thus it is important to consider the level and structure of tax rates; effectiveness of tax administration; structure of any fees

charged for use of public services; effectiveness of administration of user fees; availability of other sources of revenue inflow of foreign aid; government borrowing; and

interest payments to domestic and foreign creditors.

 

Maximum Available Resources

Obligation of conduct

The obligation is to introduce and implement tax laws and tax administration that are capable of generating sufficient revenue for ES rights in ways that comply with human rights obligations.

Total Tax Revenue as Percentage of GDP,1975-2003: Country Comparison

0

10

20

30

40

50

60

1975 1985 1990 1995 2000 2001 2002 2003

Year

Perc

en

tag

e o

f G

DP

Norway

Canada

Sweden

Switzerland

United States

Denmark

United Kingdom

France

Germany

Source: Revenue Statistics 1965-2003, OECD 2004, p. 18

Total Tax Revenue as Percentage of GDP: United States

23

24

25

26

27

28

29

30

31

1975 1985 1990 1995 2000 2001 2002 2003

Year

Per

cent

age

of G

DP

United States

Source: Revenue Statistics 1965-2003, OECD 2004, p. 18