By the Political Economy of Globalization (PEG) Team. 

As part of the follow up of the Financing for Development agenda, DAWN is exploring some of the links between tax justice and gender justice at the global level. PEG team members are researching the role of financial secrecy jurisdictions and global networks of facilitators in enabling the illicit financial flows resulting from trafficking in women. The preliminary findings were presented in three main fora with experts on tax and feminism.

In April, PEG associate and expert Veronica Grondona presented the findings at the Research Workshop on Corruption and the Role of Tax Havens organized by the Association for Accountancy & Business Affairs, City University of London and the Tax Justice Network in London. In May, DAWN Executive Committee members, Nicole Bidegain and Corina Rodríguez presented the key messages of the research at the ECLAC Expert Group Meeting on “Violence against women and its interlinkages with economic autonomy” in Santiago, Chile. Nicole also shared key insights of the research at the Dialogue on Fiscal Policy, Human Rights and Inequality in the Andean Region organized by the Centre for Economic and Social Rights (CESR), Dejusticia and the Latin America and Caribbean Tax Justice Network in Bogota.

The DAWN paper called “The role of secret financial jurisdictions in undermining gender justice and women’s human rights” will be published in collaboration with Friedrich-Ebert-Stiftung in the coming months.

The paper will present a review of existing literature and evidence, and provides new insights from more in-depth qualitative research for the case of Argentina.

Illicit Financial Flows can be defined as cross-border movements of money or capital that is illegally earned, transferred, and/or utilized. The main sources are: commercial tax evasion, trade mis-invoicing and abusive transfer pricing; the laundering of the proceeds of criminal activities, and corrupt payments; the theft of state assets (Cobham, 2014 and Baker, 2005) and; capital flight.

It is important to notice that among the international crimes generating IFFs is that of human trafficking, which impacts heavily on women. The proceeds of such exploitation appear to be laundered using the same structures, mechanisms, jurisdictions and enablers as those of tax evasion and avoidance. Human trafficking is combined with transfer pricing mechanisms applied with the objective of cross-border tax abuse and capital flight. Such structures are organized with the knowledge and skills of tax and legal advisors, with banks, acting as enablers.

Therefore, confronting and dismantling the global enablers and secrecy jurisdictions will be beneficial not only for transparency and global equality but also to achieve greater gender equality and to respect, protect and fulfill the human rights of women and girls.

What has recently become known as the “Panama Papers” regarding the leak of information on companies and entities set up by the legal firm Mossack Fonseca for financial secrecy and tax avoidance purposes, is a reminder of the size of the problem implied by such secrecy jurisdictions.

Trafficking in persons is both a consequence and a cause of women’s rights violation. The lack of resources to deliver proper public policies that guarantee access to basic living standards is one of the roots of women´s vulnerability to human trafficking networks, as well as to labor and sexual exploitation.

Facing this severe injustice requires political will and practical action in several levels. For instance:

• Review all global tax and financial policies, treaties and agreements compliance with human rights, gender equality, labour and anti money-laundering standards.
• Agree on an international standard to sanction global enablers/facilitators of tax abuse and human trafficking with special focus on banks, secrecy jurisdictions, shell companies, legal advisors and firms and corrupt government authorities.
• Establish a UN intergovernmental tax body with universal membership and equal voting rights, which is adequately resourced, providing it with gender expertise and mandating it to review national, regional and global tax policy according to gender equality and human rights obligations.
• Enlarge political space to implement progressive taxation on income and wealth. This will imply a radical change in tax burden and tax structure shifting the burden of taxes away from women, people living in poverty and other marginalized groups towards highly profitable sectors that currently are benefiting from tax incentives and subsidies and using strategies of tax evasion and avoidance to shift their profits to low-tax jurisdictions. Progressive tax systems should also remove gender indirect and direct bias including by publicly review harmful tax incentives and exemptions especially to MNE’s.
• Establish systematic coordination mechanisms between Finance intelligence units, tax authorities, Central Banks, customs, women machineries and human trafficking prosecutors in order to eliminate illicit financial flows, human trafficking and gender based discrimination. ~