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.

The project examines six aspects of macroeconomic policy:

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

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 cultural rights.

respect

requires states to refrain from interfering with the enjoyment of economic, social and 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, and Children (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?

Evolution of public social spending in Mexico 1985-2003 Public Social Expenditure in Mexico as % GDP

2 1 0 8 7 4 3 6 5 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Year

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

But…how does Mexico compare with other LAC countries? Public Social Expenditure as % GDP (2004)

50 40 30 20 10 0 A rg en tin a B ra si l C os ta R ic a C ub a

Country

Source: ECLAC, Statistic and Social Indicators 2007.

M éx ic o P an am a LA C

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.

Maternal mortality rates LAC (2000)

300 250 200 150 100 50 0 Brasil Costa Rica Cuba Chile Mexico Panama LAC

Country

Source: ECLAC Statistic and Social Indicators 2007.

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)

30.00% 25.00% 1.0% 3.8% 20.00% 15.00% 10.00% 5.00% 0.00% 6.7% 12.7% OCDE 0.7% 1.8% 1.8% 6.7% 2.1% 3.8% South America 2.4% 2.9% 3.9% 1.4% 1.9% Central America Income tax Other direct taxes VAT Source: Ministry of Finance, Mexico (2007) IEPS 2.0% 2.3% 5.7% 1.8% 3.1% Latin America Other indirect taxes 0.5% 0.4% 4.1% 0.2% 4.8% M exico 2006/p

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

VAT INCIDENCE

Percentage of Total Collection Net Payment wrt personal income (%) Including Exempted Products as part of Income (%) I II III IV V VI VII VIII IX X 1.451 2.367 3.339 4.256 5.563 6.969 8.955 10.923 15.291 40.887 11.4 10.7 10.4 10.0 9.3 9.0 8.6 8.8 8.1 6.5 5.221 4.890 5.053 5.069 5.30 5.371 5.527 5.310 5.181 5.774 Source: ENIGH, 2002

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

Maximum Available Resources

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.

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

60 50 40 30 20 10 0 1975 1985 1990 1995 2000 2001 2002 2003

Year

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

31 30 29 28 27 26 25 24 23 1975 1985 1990 1995

Year

2000 2001 2002 2003 United States Source: Revenue Statistics 1965-2003, OECD 2004, p. 18