Fair And Effective Tax Policies Needed To Advance Economic, Social And Cultural Rights And Equality, UN Committee Says

GENEVA (28 February 2025) - The UN Committee on Economic, Social, and Cultural Rights today called on States parties to design and implement their tax policies to promote economic, social and cultural rights and reduce high levels of inequality.

In a statement issued today, the Committee, emphasized that sound fiscal policies, including both the mobilization of sufficient resources and adequate social spending, are essential to realize economic, social and cultural rights.

“Taxation is a key instrument for mobilizing resources to implement economic, social and cultural rights and to address poverty and socio-economic inequalities.”

At domestic level, the Committee identified situations where regressive ineffective tax policies hamper the capacity of States parties to fulfil economic, social and cultural rights. “One such example is a tax policy that maintains low personal and corporate income taxes without adequately addressing high income inequalities.”

It also highlighted the negative impacts of consumption taxes such as value-added tax (VAT). “VAT can have adverse impacts on disadvantaged groups such as low-income families and single parent households, who typically spend a higher percentage of their income on everyday goods and services.”

The Committee called on governments to shift towards more equitable tax structures, from relying on indirect taxes to a more direct income taxation approach, to ensure that high-income and wealth groups and large corporations contribute their fair share to national revenue.

A well-designed tax system, the Committee observed, should not only generate sufficient public revenue but also serve as a tool for reducing socio-economic inequalities.

It called for comprehensive assessments of the impact of existing and proposed tax policies through transparent, evidence-based processes, ensuring that taxation fosters rather than hinders economic, social and cultural rights. These assessments shall include the overall distributional impact and the tax burden on different income groups, women, and other disadvantaged groups, and the benefits and impact of various tax exemptions, including those related to natural resources.

At the international level, the Committee welcomed General Assembly Resolution 78/230, which lays the groundwork for a United Nations Framework Convention on International Tax Cooperation to improve international coordination in tackling tax evasion, illicit financial flows, and corporate profit-shifting.

“Low effective corporate tax rates, wasteful tax incentives, lax regulation of illicit financial flows, tax evasion and tax avoidance, and the permitting of tax havens and financial secrecy drive a race to the bottom, depriving other countries of significant resources for public services on health, education, housing, and for social security and environmental policies.”

The Committee underscored the duty of States to regulate financial institutions and corporate entities within their jurisdiction to prevent tax abuse. “States parties should take all measures to combat illicit financial flows […] by business enterprises operating within or domiciled in their territory, including through the adoption and enforcement of mandatory due diligence mechanisms.”

It further called for stronger international cooperation to build an inclusive, fair and effective global tax governance, including measures to enhance financial transparency, eliminate tax havens, and implement a globally coordinated minimum corporate tax rate.

“Aligning tax cooperation with the obligations under the Covenant can contribute to the effective mobilization of resources and redistribution of wealth, thereby addressing high levels of inequalities and facilitating substantial investments in the institutions, public services and programs essential for the realization of economic, social and cultural rights for all,” the Committee said.

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