Following the global financial crisis, during the accompanying austerity measures and the continuous rise of economic inequality around the world, there is a rising realization that tax policy is important for human rights. Realizing rights necessitates the expenditure of resources. Taxation remains the primary means by which governments raise the funds required to deliver basic public goods and services and defend rights.

Furthermore, taxes has an impact on equality and non-discrimination, two fundamental principles of the human rights framework. Tax policies can alter the distribution of resources within and across countries, entrenching or alleviating social, economic, and political differences, depending on how regressive or progressive they are.

Tax policies also serve to regulate behavior by encouraging or forbidding specific activities through repricing. Finally, tax policy, like human rights law, is fundamentally concerned with the interaction between individuals and the state. When properly designed and administered, taxes can strengthen representative democracy.

Debates about tax rules and abuses have garnered public attention in recent years, with growing outrage over corporate tax scandals and rich elites’ use of tax havens to avoid paying their fair share.

But there has been limited attention in legal scholarship and advocacy to the effects of these tax policies and practices on human rights, or to the implications of human rights law for the design and implementation of taxes internationally and domestically. Through applied research, legal analysis, advocacy before international bodies, and public conferences, the Center and the Global Justice Clinic have encouraged public debate and informed policy-making regarding the relationship between the international human rights framework and fiscal regimes, including taxation.

The Centre for Human Rights and Global Justice encourages multidisciplinary conversation and research on the links between taxation and human rights as part of its Initiative on Inequality, the Global Economy, and Human Rights. The Centre hosted a two-day international conference on taxes and human rights at NYU in September 2016, followed by a day-long workshop for researchers and practitioners on legal accountability for tax injustice. A selection of the academic papers given at the conference will be published in an edited collection by Oxford University Press in the near future.

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In conjunction with the Center’s efforts to enhance scholarly research and interdisciplinary dialogue on human rights and taxation, the Global Justice Clinic has worked to enhance state accountability for tax-related human rights harms and support legal reforms through advocacy at the international level.

Together with partner organizations, including the Center for Economic and Social Rights and the Tax Justice Network, the Global Justice Clinic has successfully convinced international human rights treaty bodies, including the Committee on the Elimination of Discrimination Against Women and the Committee on Economic and Social Rights, to address tax laws and government facilitation of global tax abuse as part of their state party reviews.

In his role as UN Special Rapporteur on Extreme Poverty and Human Rights, Philip Alston presented a report drafted by his predecessor, Magdalena Sepulveda to the Human Rights Council in June 2014, outlining the ways in which domestic and international tax policies implicate states’ legal obligations under human rights law. In his country missions and thematic reports, the Special Rapporteur continues to focus on fiscal policy as both a cause of and a potential solution to extreme poverty.

Regardless of these and other recent initiatives, more critical analysis and cross-disciplinary exchange are required, both to educate the human rights community about why tax policy is human rights policy and to broaden the range of legal considerations and principles that tax experts use in designing and evaluating tax policies, including human rights obligations and norms.

What are the Principles of Good Taxation?

It has existed since the earliest forms of recorded government in history, dating back to ancient Egypt, when the pharaohs levied taxes in the form of shares of agricultural production and labour; to ancient Rome, where farmers were required to pay a tenth of their production (decima) to the tax administration (aerarium); and even to Mediaeval Europe, where a similar taxation system became one source of funding for the Church.

Governments have created increasingly sophisticated systems and methods for determining who is taxed, what is taxed (the “tax base”), how much is charged, and which personal circumstances of taxpayers should be considered. But what are the guiding principles for taxation, and how do they affect our daily lives?

Firstly, while it’s true that it’s typically implemented through the coercive power of a public authority, taxation should not be imposed arbitrarily. Indeed, many modern institutions include some restraints on the uncontrolled levying of taxes, with parliament usually having to approve the executive’s proposals (for example, in 1628, the Petition of Rights introduced restrictions on the Crown on non-parliamentary taxation in England).

Rather, there should be careful consideration of how the forced acquisition of money affects taxpayers: on the one hand, taxation provides a fundamental source of income for running the government and providing public services; on the other, taxation reduces individual disposable income and business profits and could therefore have a negative impact on decisions about work, consumption and investments.

Adam Smith’s ideas of good taxation provide a solid foundation for taxation today, but they are not always implemented. Sometimes tax systems target specific groups of taxpayers or types of consumption while leaving others undisturbed. Sometimes tax systems lack transparency, charging levies on some commodities (for example, fuel excise) without making this clear on our bills.

Taxpayers are sometimes saddled with administrative responsibilities, such as filing yearly tax forms online. Sometimes the tax administration does not or cannot effectively execute regulations or punish those who avoid taxes.

How can governments levy taxes while minimizing negative effects on the economy? Generally, taxes (on income, on production, or on the consumption of goods) have distortionary effects: they alter the decisions that individuals and businesses would make if the taxes were not in place.

• Excises

For example, excises (taxes that are levied on the production of goods) often cause producers to increase the prices of goods, passing the burden of taxation on to consumers. When prices go up, there’s less demand, so businesses earn less income and consumers enjoy less consumption.

• Personal income tax

In addition, personal income tax reduces consumer purchasing power: consumers purchase fewer goods than they would do without the income tax, generally cutting luxury and unnecessary items first, and thereby hitting some industries more strongly than others.

Taxation can also have important effects on economic development and growth. When international financial markets are liberalized, for example, capital tends to flock toward countries where tax regimes are more advantageous.

When personal income tax is relatively high, individuals may prefer spending their time on recreational activities rather than on additional work. When taxation on savings (including taxation on financial rents and on real estate) is relatively high, individuals may prefer consuming their income today rather than putting part of it aside for the future.

Overall, the effects of decisions that individuals and businesses make may result in less money being available for investments and less effort to undertake business activities.

Benefits Of Taxes

We normally think of a tax on income when we hear the word “TAX,” whether it’s a personal income tax, a corporate income tax, a property tax, or a consumption tax. However, taxes are more than just a type of income tax. They are also used to pay for government services and in other sectors of the economy.

“Tax is the money you pay the government for the government services you receive.” Taxes are based on your income and are the government’s primary source of revenue.”

The most common and significant government intervention to redistribute money among the population is taxation. It is an attempt, through a progressive taxation system, to share the burden of economic growth. The tax burden on upper income groups is larger, whereas the burden on lower income groups is lower.

There are numerous advantages to paying taxes. They aid in the creation and maintenance of infrastructure, such as roads, and they can even assist in the establishment or maintenance of institutions necessary for the rule of law and the operation of the democratic process.

“Your government requires tax to provide you with basic necessities such as roads, electricity, water supply, schools, hospitals, public transport, and other essential services.”

The government spends the tax money to give its citizens with all of the necessities for a comfortable existence. Here are some of the advantages of paying taxes:

• Taxes fund public infrastructure and services. For example, in India, the country spends the highest proportion of its GDP on public infrastructure and services, as compared to other emerging economies. With a year-on-year rise in capex of more than 35% and a targeted infrastructure investment of more than Rs 10 lakh crore in Budget 2022-23, the Union government has reaffirmed its commitment to utilize infrastructure as a force multiplier for long-term economic growth.

• Taxes are also used for social development and welfare programs. For example, the government of India allocates a substantial amount of revenue, about 6% of GDP, for various social development and welfare programs, including public health and nutrition, education, and rural development programs.

• Taxes fund education. For example, in India, where illiteracy is a major problem, the government needs a lot of money to provide quality education; not only in urban areas but up to the grass root levels. This includes public and private expenditure on education, including spending on school infrastructure, teachers’ salaries, and research, development and innovation.

• Taxes secure the country’s borders. This includes expenditures on equipment and personnel, defense research and development, defense imports, international military cooperation, and international peace-keeping operations.

• Taxes fund salaries and pensions of government employees. This includes wages and pensions of public sector employees such as central government employees, state government employees, and local government employees.

• Taxes pay the principal and interest on government debt. The government of India has a large external debt and a sizable portion of its outstanding debt is denominated in foreign currency. As per the latest data from the finance ministry, external debt in India increased to USD 593,100 Million in the third quarter of 2021 from USD 571,300 Million in the second quarter of 2021. Therefore, the government has to borrow money from the international financial markets on which interest is also to be paid.

• Taxes fund the government’s public transport system, including rail and road transport. This includes the purchase of a wide variety of vehicles, including airplanes, ships, buses, trains, coaches, tractors, tractors and other vehicles for road and highway construction, and other infrastructure projects.

• Taxes fund the government’s law-enforcement agencies, including the police, the paramilitary forces, the air and sea, border patrol, customs and excise, and intelligence agencies. This includes expenditures on personnel, equipment, training, and infrastructure to provide for security and public safety.

• Taxes fund basic economic stability and social security schemes that are meant to help people who are unemployed or have a low income, such as the National Rural Employment Guarantee Act (NREGA) and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

• Healthcare & Medical Infrastructure is also funded through taxes. This includes expenditures on health and medical research and development, hospital infrastructure, health insurance, and other health services.

And during these Corona times, the nation realized the need for great improvement in the health & medicare sector in our country. Subsequently, the budget allocation for this segment has been increased.

To govern a country, we need taxes. It is an essential component of government. It is necessary for a country’s advancement and development. It is a duty, not a privilege.