Corruption costs $1 trillion in tax revenue globally reports IMF
by Reuters, Euronews, Transparency International
Corruption costs $1 trillion in tax revenue globally, by Rodrigo Campos.(Reuters)
Curbing corruption could generate about $1 trillion (760.23 billion pounds) in tax revenues annually across the world, according to research from the International Monetary Fund.
In addition to increasing government revenue, fighting corruption can also reduce waste and even help to lift test scores among public school students, the IMF said. It also improves overall public trust in the government.
"Less corruption means lower revenue leakage and less waste in expenditures, and higher quality of public education and infrastructure," said the report.
The pattern of lower corruption perception and higher revenues is maintained across developed, emerging and low-income countries, the data showed.
"Among advanced economies, a country in the top 25% in terms of control of corruption collects 4.5% of GDP more in revenues, on average, than a country in the lowest 25%. The gap in revenue collection is 2.75% of GDP among emerging market economies and 4% of GDP among low-income countries," said the report.
Previous studies showed that extractive industries like mining and oil drilling are hotbeds for corruption, as are procurement and the administration of state-owned enterprises. The Fund focuses on transparency and oversight as key elements in curbing corruption in these areas, with a strong, free press as catalyst.
"We expected transparency would go together with good fiscal outcomes, but what surprised us is that the effect of transparency is much stronger in countries that have a free press or a (strong) civil society," said Paolo Mauro, deputy director in the IMF''s Fiscal Affairs department. "And when you have those two together the effect is even stronger."
Mauro and Paulo Medas, a deputy division chief in the same IMF department, co-authored the study, a chapter of the Fund''s Fiscal Monitor, which is being published in parts this week ahead of the IMF''s spring meetings scheduled next week in Washington.
Among other recommendations to curb corruption, the Fund calls for the professionalization of civil service, including merit-based hiring, as well as the need for simple tax rules and business codes to avoid the temptation of bribes to navigate them.
The report recommended technology that can fight corruption. For instance, it said, taking procurement on line is seen as a rapid and inexpensive part of the anti-corruption puzzle.
So-called e-procurement "is a relatively cheap initiative that can open competition, so you can have bidders from any place in the country or the world and it makes it very cheap and transparent for companies to bid," said Medas.
Chile and South Korea are cited as examples in the effectiveness of e-procurement, while Rwanda and Georgia show some of the highest increases in revenue collection relative to GDP.
Emerging countries'' dependence on extraction of raw materials for economic development gives them an added incentive to curb corruption and makes success even more important.
"You want to invest in very good institutions, extremely high levels of transparency and very intrusive external oversight,” said Medas.
The trillion in added tax revenues comes on top of a previous study that stated that corruption in the public sector costs between $1.5 trillion and $2 trillion annually in bribes alone. http://bit.ly/2YVexk7
http://www.transparency.org/ http://www.taxjustice.net/ http://www.gfintegrity.org/
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Reducing Inequalities is fundamental to human rights
by Michelle Bachelet
UN High Commissioner for Human Rights
OHCHR Expert meeting on Reducing Inequalities: SDG 10 Progress and Prospects.
A great deal of my life’s work has been about confronting inequalities, and I am eager to share with you some of the lessons I have learned.
Let me start by stating my basic proposition: reducing inequalities is fundamental to human rights; and upholding human rights will greatly reduce inequalities, in all their forms.
Inequalities frequently arise from persistent discrimination against specific communities and groups of people, divided along lines of gender, race, ethnicity, religion or other status. They can cut across generations, and affect more profoundly those whose identity spans several of those characteristics.
By stripping people of opportunities, resources and voice, inequalities and discrimination place the most marginalized at the outskirts of society. They are the most likely to go hungry; live in unhealthy conditions; suffer from natural disasters and epidemics; lose access to services and essential safety nets; and suffer repeated human rights violations. And, many more live precariously above the poverty line, often just one crisis away from falling into destitution.
As Oxfam has recently shown, the growing gap between rich and poor is undermining the fight against poverty and fuelling public anger across the globe. High levels of inequality correlate with underfunding of public services and low levels of access to essential social services such as education, healthcare, safe water, decent housing and social protection.
As these fundamental rights are diminished, dismantled, commodified and privatized, more and more people are pushed to the margins.
Political and economic instability are logical outcomes, because inequalities deprive people of their rightful voice in decision-making – their power.
Maternal mortality is a simple example: Maternal mortality is almost always preventable. Relatively inexpensive provisions can significantly reduce the number of women who die in childbirth, or soon after childbirth. But the decision to allocate resources to that objective is political. And if women don’t have power that money will not be allocated.
For all other goals in the 2030 agenda to succeed, there must be progress on SDG 10. Almost by definition, in order to be sustainable, development has to become more inclusive and more equitable.
I am deeply concerned that progress on this key goal is lagging–people are still being left behind, and indeed, some people are being pushed backward.
The absence of disaggregated data identifying who’s left behind, be it women or afro-descendants, means that policy makers cannot assess the situation nor develop appropriate responses or policies.
In many places, we’re seeing powerful actors in politics and the media fan the flames of discrimination, racism, xenophobia and other forms of intolerance, questioning the values of justice, inclusion and human rights. This, along with other factors, is deepening exclusion, and inequalities.
Those growing inequalities feed into the increasing backlash not just against élites, but against institutions of governance -- as people who feel powerless and ignored throw their support to populists and xenophobes.
But inequalities are not the inevitable and unpreventable result of market forces. They stem from policy choices. We know where they come from. We know what can be done about them.
Over the last 40 years, structural adjustment, austerity and orthodox economic policies have weakened the capacity of the state to deliver on universal social services.
These policy choices have had the predictable effect of concentrating gains at the top, while forcing the rest of society to shoulder the burden of losses. They have exposed the majority of people to greater instability, with even more disproportionate impacts on the poorest and most vulnerable.
Inequalities have also meant that society is losing out on the contributions of all its members. The economic empowerment of women can boost productivity and increase economic diversification and as studies have shown, trillions could be added to global GDP by 2025 by advancing women’s equality.
We can and must make different choices.
My own country has a high GINI index, in a region of very high GINI indexes. I’ve seen what inequalities look like, and I’ve also seen the policies that work and some that don’t.
When I began working as a pediatrician for an NGO working with child victims of the dictatorship in some of the poorest areas of Santiago, I saw what inequalities mean: children whose needs are not addressed and whose future is limited.
When I became Minister for Health, my first priority was to cut waiting times in health facilities – the painfully long lines, which people literally had to stand in, to wait for care; and the weeks and months it took to get an appointment for essential examinations and medical and surgical interventions.
As Minister for Defence, I experienced how vital it is for civilians to oversee military budgets, so that military spending does not undermine efforts to bring services to the people.
As President of Chile, I launched Chile Crece Contigo [Chile Grows with You] (CCC), the first systematic, inter-sectoral, structured policy for protecting early childhood rights was drawn up, with prenatal monitoring for mothers followed by an initial scope from birth to 4 years of age, which was extended to age 9.
In my second term, we cut university fees for students from disadvantaged families – so that an entire cohort of students became the first people in their families ever to attain tertiary education.
Similarly, as President of Chile, I had to deal with the global economic crisis. What was our response? We increased public investment, in line with countercyclical fiscal policy, which aimed to create new employment opportunities and spur the economy.
We developed measures to advance universal social protection, including pension system reform to introduce more solidarity, with redistribution and coverage to ensure that the most vulnerable could count on a basic salary. We took concrete policy measures so that no one was left behind.
Results have shown that the adoption of an active role by the State in social protection had been the correct response. I am telling you all this is to show that this can be done. You don’t have to be a wealthy country. You don’t have to have attained some mythical level of, social, economic or political development.
But, you do have to set priorities, and be bold enough to confront some powerful lobbies. Most of all, you must put human beings, and human rights, at the centre of economic policy. This takes leadership.
Of course, the solutions will not be the same everywhere. Every country, every community, every situation is specific. But this much we know: the most effective remedies address root causes.
Exclusion from access to power and justice; economic governance and policy choices that ignore human rights; systematic discrimination – these are the issues we need to prioritise and remedy.
Let me quote the World Bank on this: “Growth and poverty alleviation are crucial, but alone will not suffice …inclusive decision making is fundamental to sustaining peace at all levels, as are long-term policies to address economic, social, and political aspirations.” The “Pathways to Peace” report by the Bank and UN demonstrates the cost-effectiveness and urgency of upholding human rights commitments, including commitments to reduce inequalities.
Combating excessive economic inequalities, and all forms of discrimination, and their effects, is not only the right thing to do, it is the smart thing to do.
Today, inequalities are as high as they were when global stock-markets crashed in 1929. Many believe those inequalities caused the ensuing economic crisis, and the resulting widespread misery, which fed into the bigotry and violence that escalated into global war.
In 1948, the Universal Declaration of Human Rights was conceived as an antidote. It clearly set out the responsibilities of the State to secure freedom from fear and want for all people, without discrimination. Leaving no one behind is not a new vision, in other words. It is just one that we lost sight of.
To secure this vision, to reduce economic inequalities, and to end discrimination, we need to take action on the SDGs.
The specifics must be adapted for each country, yet we know what we need to do:
Strengthen the role and responsibilities of the state to secure freedom from fear and want, without discrimination; Ensure a fair and progressive tax system that generates the resources to deliver; Provide universal social protection and universal health coverage.
Protect labour rights; Secure the right to education for all children; End all forms of discrimination, exclusion and marginalisation, and; Enable participation, voice and representation of all people – and all countries – in the decisions that affect people’s lives.
Let me end by suggesting that we need to add to the SDG indicators a clearer indicator of inequality, so that we can fully measure our progress and prospects.
Measuring the incomes of the bottom 40%, as the SDG indicator 10.1 does, can get us to a certain point, but it will be impossible to address inequality without also shining a light on the top 1%.
When the indicators are reviewed in 2020, we need to include a measure of inequalities, such as the Gini coefficient or the Palma ratio.
Finally, let me recall that in 1948, in the wake of the Second World War and the Great Depression, the UN General Assembly proclaimed the Universal Declaration of Human Rights as a “common standard of achievement for all peoples and all nations”, calling on all States to secure economic, social and cultural rights as well as civil and political rights for all their people.
Human rights thus provide our common vision. And today, the SDGs give us an action plan and stepping stones to get there. Reducing inequalities and eliminating discrimination are central to leaving no one behind and realizing human rights for all. http://bit.ly/2YSG85H
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