ALLIANCE SCHOOL OF LAW, ALLIANCE UNIVERSITY

TAXATION LAW

SUBMITTED TO :

Prof, Dr, Prakash Kanive.

SUBMITTED BY :
Katram Sri Krishna Teja

200401427051

TOPIC:
 AN ANALYSIS OF THE CORRELATION BETWEEN TAXATION AND
HUMAN RIGHTS.

ABSTRACT

The global community is currently in the throes of a severe human rights crisis, characterized
by a multitude of challenges such as debt distress, poverty, conflict, ecological and climate
crises, and health insecurities. Financial systems exacerbate these complex problems, serving
as both a root cause and a manifestation of human rights shortcomings. Wealthy elites and
multinational organizations benefit from these weaknesses. Simultaneously, political interests
leverage popular stories and established conditions to implement regressive tax policy
changes. This is not the emergence offer new global order but rather a result and extension of
historical legacies tied to colonialism, financial exploitation and discrimination. This paper
delves into the intricate relationship between taxation policies and human rights, shedding
light on the implications of fiscal decisions on fundamental human rights. It also focuses on
how taxation serves as a primary source of government revenue to finance public goods and
services, which directly contribute to the realisation of human rights, such as access to
education, healthcare, and clean water. A progressive tax system can be instrumental in
reducing inequalities and promoting economic and social rights. Conversely, regressive tax
systems, which disproportionately burden low-income individuals, may exacerbate disparities
and hinder the enjoyment of these rights. It explores how arbitrary, discriminatory, or
excessive tac practices can infringe on human rights principles, such as non-discrimination,
privacy and the right to an adequate standard of living.
Key words: Taxation, Human Rights, Fiscal Policy, Regressive Taxation, Progressive
Taxation

CHAPTER 1

INTRODUCTION

Human rights doctrine is based on the foundational principle that individuals inherently
possess certain entitlements, known as rights, which cannot be taken away and are
interrelated1. These rights are outlined in both the “International Bill of Rights 2” and a
nation’s domestic “Bill of Rights”, commonly enshrined in its constitution. It is important to
acknowledge, however, that the western understanding of human rights, which often focuses
on individual freedoms and property rights, is a subject of dispute among certain non-western
critics. They argue that this perspective tends to side-line the essential rights of communities
1 the Vienna Declaration and Program of Action (1993) UN Doc. A/ CONF.157.23
2 Article 1(1) of both the International Covenant on Economic, Social and Cultural Rights
(1966) (ICESCR) and the International Covenant on Civil and Political Rights (1966)
and marginalised populations. Through this perspective, national tax codes are generally
viewed as being in alignment with fundamental human rights. In most cases, it is recognised
that lawful taxation, except in instances affecting the right to protection against arbitrary
deprivation of property and the right to personal privacy, does not directly infringe upon
human rights.

Taxation is regarded as a legitimate means by which governments generate revenue to fund

essential public services, infrastructure, and social programs, all of which are pivotal to the
well-being of their citizens. However, contemporary scholarship underscores a deeper and
more intricate connection between economic development and the realisation of human
rights. Economic development encompasses a broad range of factors, including income
growth, employment opportunities, access to education and healthcare, poverty reduction,
and the improvement of living standards. These aspects are interdependent and essential
components of human well-being and, as such, are intertwined with the full enjoyment of
human rights.

Economic development is not merely an abstract economic concept; it is a critical factor that
influences the tangible enjoyment of human rights. When economic development is pursued
and achieved in a manner that promotes social equity 3 ,inclusivity ,and the protection of
vulnerable populations, it can significantly contribute to the overall advancement of human
rights .Conversely, economic policies that perpetuate inequality, marginalise specific groups,
or neglect the basic needs of citizens can have adverse implications for the realisation of
human

rights. So, while tax codes themselves may not typically violate human rights, their broader
economic implications and the policies associated with them play a pivotal role in shaping the
human rights landscape. The relationship between taxation, economic development, and
human rights is multifaceted and underscores the importance of addressing economic policies

3 M.Govinda Rao, “Tax reforms in India: Achievements and challenges”,2000, vol 7.

in a manner that prioritises the protection and fulfilment of fundamental rights for all
individuals within a society4.

RESEARCH PROBLEM
The presence of regressive taxation policies impact human rights and economic development

RESEARCH OBJECTIVES
• To understand the impact of taxation policies on economic development.
• To understand how regressive tax systems violates human rights.
• To understand the relationship between taxation and human rights.

RESEARCH QUESTIONS
• How can taxation policies be designed and implemented to promote social equity,
inclusivity, and the protection of vulnerable populations, ultimately contributing to the
advancement of human rights?
• How can taxation policies be designed and implemented to promote social equity,
inclusivity, and the protection of vulnerable populations, ultimately contributing to the
advancement of human rights?
• What is the influence of tax policies on the actualization of human rights, and to what
extent they promote or hinder economic progress?

4 Tyanai Masiya, “Taxation and Human Rights”, 2011, second quarter, vol 2, pg 3.
LITERATURE REVIEW

The methodology of research referred to in this paper is the doctrinal method of research.
Doctrinal method of research: The most prevalent methodology used by persons to do
research and that is doctrinal or library-based research. Many other resources like Articles
from the internet and books were also referred in this paper. As this is generally known, this
is completely theoretical research that consists of either simple research targeted at locating
a single problem and researching on that particular problem. In a nutshell, it's library-based
as well as internet based research and is aimed at determining the "one correct answer" to
this issue.
 CHAPTER 2

TAXATION AS A SOURCE OF GOVERNMENT REVENUE

The collection of taxes and fees serves as a fundamental method by which countries generate
the necessary public revenue to fund investments in human potential, infrastructure
development, and the delivery of services to both citizens and businesses 5. Taxation is an
indispensable cornerstone of government finance on a global scale, serving as the preeminent
source of revenue for governments at multiple tiers, including federal, state, and local 6. The
essence of taxation lies in the collection of funds from individuals businesses, and various
entities, facilitating the funding of a wide array of government operations unpublished
services that underpin societies. These services encompass infrastructure development,
healthcare, education, National Defence, social programs and more, reflecting the diverse
roles and responsibilities of governments.

The responsibilities of governments, which encompass the provision of public goods, the
execution of developmental projects aimed at enhancing the living standards of citizens, and
meeting ongoing expenses, demand a concerted effort to intensify revenue generation, both
domestically and internationally. However, recent global trends increasingly recognize the

5 WorldBank,” Taxes & Government Revenue”, https://www.worldbank.org/en/topic/taxes-

and-governmentrevenue.
6 M.Govinda Rao, “Tax reforms in India: Achievements and challenges”,2000, vol 7.
essential role of governments in sustaining welfare states and managing public expenditure. It
is now widely acknowledged that governments play a significant part in the development and
welfare of their citizens7. For any national or sub-national economy, the crux of economic
progress lies in revenue mobilization, as it allows for the rationalization, if not reduction, of
expenditure. Within the context of Kerala's state economy, the goals of revenue mobilization
encompass preserving the achievements in the social sector while striving for sustainable and
rapid economic growth8.Furthermore, tax systems exhibit a spectrum from progressive to
regressive and proportional, which play a pivotal role in wealth redistribution and the
mitigation of income inequality. Progressive tax structures impose higher rates on individuals
with greater incomes, contributing to a more equitable distribution of financial burdens.
Regressive taxes, in contrast, tend to affect lower-income individuals disproportionately,
while

proportional taxes apply a consistent, flat rate to all income levels. These nuances in tax
systems enable governments to harness taxation not only as a means of revenue generation
but also as a potent tool for economic stabilization.

The economic aspect of taxation finds expression in its role in managing inflation, stimulating
or curbing economic growth, and addressing fiscal deficits. Moreover, taxation serves a vital
function in wealth redistribution, where progressive income taxes and social welfare
programs are instrumental in reducing income disparities and fostering social equity. In the
context of governance, taxation is indispensable for the very functioning of governments,
encompassing the maintenance of law and order 9, provision of national defence, and the
conduct of diplomatic activities. Without taxation, the fundamental responsibilities of the

7 Anjali Rajank, “Tapping potential sources of revenue for the state of kerala”,2013,pg.4.
8 Anjali Rajank, “Tapping potential sources of revenue for the state of kerala”,2013,pg.4.
9 Nick Devas, “Revenue for Local Government”, chap 2, pg. 2.
state would be impossible to fulfil 10. However, taxation does present several challenges for
governments. Tax evasion, which involves illegal methods to circumvent tax liabilities, and
tax avoidance, a legal use of strategies to minimize taxes, pose significant obstacles to
revenue collection. Consequently, governments establish tax authorities tasked with the
auditing of tax returns, investigation of tax fraud, and the implementation of tax policies to
enhance compliance and enforcement. In an increasingly globalized world, taxation is further
complicated by the activities of multinational corporations and the complexities of
international tax laws. Governments are compelled to address issues related to profit shifting
and tax avoidance by these entities through international collaboration and regulatory efforts.
Moreover, the realm of tax policy is vast and complex, used as a potent instrument to achieve
specific objectives, be it spurring economic growth 11, promoting environmental protection, or
addressing social issues.

Governments often employ tax incentives and deductions to steer behaviours and investments
in preferred directions. The political dimension of taxation is equally significant. Tax policies
have the potential to impact government popularity and legitimacy, with discussions and
decisions surrounding tax changes serving as integral components of political discourse, often
decided upon by elected officials in response to diverse economic, social, and political
priorities. Taxation is a multifaceted phenomenon, integral to government finance and public
welfare, with its influence extending across economic, social, and political domains.

CHAPTER 3

TAXATION AND HUMAN RIGHTS

10 Latika Sharma, “Tax-a major source of revenue”,2019, vol 9.

11 Bernadin Akitboy,” Raising Revenue”,
https://www.imf.org/en/Publications/fandd/issues/2018/03/akitoby
In India, both the central and state governments hold authority over revenue generation, with
states contributing approximately 37% of the total revenue. The Constitution, through the 7 th
schedule, delineates the revenue sources allocated to the central and state governments in the
union and state lists. The central government primarily exercises tax powers over
nonagricultural income, wealth, corporate profits, as well as excise duties(excluding those on
alcohol) and custom duties. In contrast, states possess the authority to impose taxes on
agricultural land, income, wealth, excise duties on alcohol, sales taxes, levies on motor
vehicles and goods, stamp duties, and registration fees. Additionally, the 72 nd and 73rd
constitutional amendments designate specific tax sources for urban and rural local
governments. Notably, property taxes and taxes on the entry of goods into a local area for
consumption ,use, or sale are among the significant taxes assigned to local bodies. A
substantial portion of local government expenditures relies on the allocation of funds from
state governments12.In the Indian federal framework, where both the central and state
governments play pivotal roles in revenue generation, the ability to fund essential public
services and ensure the well-being of citizens largely depends on the revenue collected
through various taxation mechanisms. While the central government focuses on taxes such as
non-agricultural income and corporate profits, and state governments have authority over
taxes on agricultural land, income, and wealth, the fairness and equity of these tax policies
become paramount.

Regressive tax policies, which disproportionately burden individuals with lower incomes, can
undermine the very essence of human rights. They can lead to an increased economic divide,
limiting access to education, healthcare, and other basic services for marginalized and
vulnerable populations. In this scenario, individuals with limited means find themselves in a
disadvantaged position, struggling to access quality education, adequate healthcare, and even
basic amenities. This imbalance not only hampers economic and social development but also
impacts the broader spectrum of human rights, including the right to an adequate standard of
living, the right to education, and the right to health. It can result in a situation where the
12 M.Govinda Rao, “Tax reforms in India: Achievements and challenges”,2000, vol 7.
benefits of economic growth and development primarily accrue to a privileged few, while a
significant portion of the population faces barriers to improving their living standards

TAX ABUSE ON WOMEN’S RIGHTS IN SWIZTERLAND

Public revenues play a crucial role in advancing women's rights. Over the last two decades,
the Committee on the Elimination of Discrimination against Women (CEDAW Committee)
has emphasized that states committed to CEDAW must generate and allocate sufficient
resources without discrimination to meet their treaty obligations in ensuring genuine gender
equality. When government budgets fall short, women often bear a disproportionate burden
due to underfunded services, budget cuts, increased dependence on unfair revenue sources,
and heightened reliance on unpaid care work, which is often performed by women. One of
the most significant challenges to public budgets today is the loss of tax revenue caused by
cross-border tax evasion by both corporations and individuals attempting to reduce or avoid
their tax obligations. This issue has a particularly detrimental impact on developing countries
and is facilitated by states with financial secrecy laws and lax regulations on corporate
reporting and taxation13.Cross-border tax abuse refers to the practices employed by both
individuals and corporations to minimize or evade their tax obligations. This is often achieved
through contentious to minimize or evade their tax obligations. This is often achieved through
contentious methods such as shifting profits, underreporting taxable transactions, and using
offshore accounts to conceal taxable income. Collectively, these actions result in the loss of
hundreds of billions of dollars in tax revenue globally each year. Developing countries are
disproportionately affected by these losses, as they have limited overall resources and rely
more heavily on corporate taxes as a significant part of their national income.

“The existence of cross-border tax abuse is made possible by the laws and policies in certain
countries that provide unwarranted secrecy for financial transactions by individuals and

13 Alliance Sud, “Swiss Responsibility for the Extraterritorial Impacts of Tax Abuse on
Women’s Rights”, 2016, pg.2.
businesses, coupled with lenient tax and reporting regulations. Switzerland plays a significant
role in this regard, having ranked as the top country on the Financial Secrecy Index in 2015,
which assesses nations based on the level of secrecy permitted by their banking, tax, and
corporate laws, regulations, and international agreements, as well as their prominence in the
global market for offshore financial services. Despite recent commitments to reform its
banking and tax laws, Switzerland has not yet taken measures to ensure that countries most
affected by

tax abuse can benefit from increased financial transparency. Many developing countries face
insurmountable administrative burdens and are effectively excluded from agreements to
exchange tax information. Switzerland also lacks requirements for public disclosure of
crucial information related to corporate ownership, revenues, and tax payments, and it offers
no legal protections for whistle-blowers who expose information in the public interest.
Consequently, many developing countries experience substantial revenue losses, directly
hindering their ability to generate the necessary resources for the promotion of women's
rights and the attainment of genuine gender equality. The loss of revenue due to cross-border
tax abuse results in the underfunding of essential services, institutions, and infrastructure
upon which women rely. These include healthcare, education, public courts, transportation
systems, and programs specifically aimed at safeguarding and advancing women's rights.
Inadequate investment in social services disproportionately affects women, as they often
shoulder the responsibility of caregiving and unpaid work when public institutions are
underfunded”14.

REGRESSIVE TAX SYSTEMS VIOLATE HUMAN RIGHTS

14 Alliance Sud, “Swiss Responsibility for the Extraterritorial Impacts of Tax Abuse on
Women’s Rights”, 2016, pg.2.
Taxes are regarded as a critical tool with the potential to generate the necessary financial
means for a state to support the well-being of its citizens, particularly in facilitating their
growth and societal development.15 Article 1 of the United Nations Declaration on the Right
to Development (UNDRD)16 acknowledges development as a fundamental human right,
where people are at the core of the development process. As a result, the enhancement of tax
policies and administration holds significant importance in the mobilization of resources, as it
can contribute to the promotion and realization of human rights and lead to sustainable
development17. Therefore, it's not just the effective collection of taxes that matters but also the
equitable distribution and efficient utilization of the resources generated through taxation.
The challenges related to taxation, such as tax evasion, tax avoidance, and corruption in tax
administrations, are major contributors to the inadequacy of resources for financing human

rights and sustainable development. Tax evasion involves illegal actions 18 and fraud aimed at
escaping tax obligations, while tax avoidance exploits the weaknesses in tax laws to reduce
tax liabilities. Corruption in tax administrations is the misuse of power for personal gain,
diverting resources generated through taxation19. These issues not only hinder the realization

15 Maricar Joy Tuazon & Miranda Stenlund, “The Role of Taxation in the Fulfilment of
Human Rights and Sustainable Development”,2019.
16 United Nations General Assembly (UNGA) Declaration on the Right to Development (4 December 1986)
UN
Doc A/RES/41/128 (UNDRD), art 1
17 International Bar Association’s Human Rights Institute (IBAHRI), ‘The Obligation to Mobilize Resources:
Bridging Human Rights, Sustainable Development Goals, and Economic and Fiscal Policies’
(2017) <https://ibanet.org/Human_Rights_Institute/HRI_Publications/Obligation-to-
Mobilise-Resources.aspx> accessed 5 April 2019, 50
18 European Commission (EC), ‘Time to get the missing part back’ (EC Taxation and Customs Union)
<https://ec.europa.eu/taxation_customs/fight-against-tax-fraud-tax-evasion/missing-part_en>
19 ‘Tax avoidance, Tax evasion and Tax havens’ (2015)
<https://arbeiterkammer.at/infopool/wien/Studie_tax_avoidance.pdf> accessed 24 April 2019,
4-5.
of human rights and sustainable development but also risk violating international obligations
when states fail to address them.

Furthermore, governments frequently resort to spending cuts 20 as a quick fix for resource
shortages, inadvertently taking retrogressive measures that impede economic and social
rights, negatively impacting human rights and global development objectives. These cuts
often result in discrimination and inequality, particularly affecting vulnerable groups, such as
individuals with disabilities and children. The lack of support for their basic needs can lead to
long-term harm and unsafe environments. To enhance and secure resources for human rights
and sustainable development, states should reduce their reliance on aid and consider
alternative sources, with taxation being a prime candidate. However, for taxation to serve as
an effective resource, it's crucial for tax policies and administrations to address and overcome
these challenges, ensuring the efficient mobilization of tax-derived resources. In doing so,
countries can better fulfil their human rights obligations and contribute to sustainable
development on a global scale21.

Therefore, the fairness and progressivity of tax policies are inextricably linked to the
realization of human rights. Tax systems that are regressive can perpetuate and exacerbate
inequalities, hindering the broader goal of achieving a just and equitable society where all
individuals can enjoy their fundamental human rights without discrimination. Therefore, the
design and implementation of tax policies in India, as in any nation, necessitate a careful
consideration of their potential impact on the human rights and well-being of all its citizens.

20 UNHRC, Report of the Independent Expert on the Question of Human Rights and
Extreme Poverty, para 36. 21 Maricar Joy Tuazon & Miranda Stenlund, “The Role of Taxation
in the Fulfilment of Human Rights and Sustainable Development”,2019.
SUGGESTIONS

• A taxation framework rooted in human rights principles should include mechanisms

that facilitate active and responsive engagement of the public at all stages of fiscal law
and policy development, encompassing both before and after their implementation
must be adopted.
• A fiscally responsible framework that upholds human rights should incorporate
mechanisms for accountability, allowing any affected party or the general public to
voice their grievances concerning tax legislation, policy, or its execution in a manner
that influences policymaking.

CONCLUSION

Taxation serves as a fundamental mechanism for governments to mobilize resources

necessary to fund human potential, infrastructure development, and essential services. When
tax systems are designed with fairness and equity in mind, they can be a catalyst for the
realization of human rights. Adequate tax revenues can be channelled into critical areas like
education, healthcare, and social welfare, contributing to the protection of economic, social,
and cultural rights. Progressive tax policies can help redistribute wealth and reduce income
inequality, aligning with the principles of equality and non-discrimination. Moreover, a well-
designed taxation framework can promote sustainable development, which is a vital
component of human rights. Regressive tax systems can have detrimental effects on human
rights. Tax policies that disproportionately burden lower-income individuals can exacerbate
inequalities and hinder access to basic services. This can lead to a lack of economic
opportunities and hinder the realization of fundamental human rights such as the right to
education, health, and an adequate standard of living. Furthermore, when governments face
revenue shortfalls, they may resort to spending cuts, inadvertently impeding economic and
social rights, particularly for marginalized groups. Tax evasion, avoidance, and corruption in
tax administrations can also deplete resources needed for human rights fulfilment and
sustainable development.

Therefore, taxation policies should be developed and implemented in a manner that

encourages public engagement and accountability. Active participation of citizens in the
decision-making process can help ensure that tax policies are fair, equitable, and responsive
to human rights concerns. Moreover, tax systems should be designed to be progressive, with a
focus on wealth redistribution and reducing income inequality. This approach is in line with
the principles of non-discrimination and equality, central to the realization of human rights.

In conclusion, the impact of taxation on human rights is profound and multifaceted. Tax
policies can either empower or hinder the fulfilment of human rights, depending on their
design and implementation. Governments bear the responsibility of carefully crafting tax
policies that prioritize fairness, equity, and the well-being of all citizens to promote and
protect human rights in a just and equitable society.