We need progressive taxation to finance education

Published on 
03/29/2022

Last Wednesday (23st March), the members of the TaxEd Alliance -- Global Alliance for Tax Justice, ActionAid, Tax Justice Network, Education International and Global Campaign for Education -- hosted the event “Shifting the narrative: Why we need progressive taxation to finance education, and the role of IFIs”, as part of the programme of activities of the Global Days of Action on Tax Justice for Women’s Rights 2022. The session aimed to promote a discussion about the importance of progressive taxation to finance education and how the international financial institutions could advance it.

Watch the video recording:

The chronic underfunding of education

According to Julie Juma, Education Programme Manager at ActionAid International, the chronic underfunding of education has affected the delivery of quality inclusive public education in most low-income countries. “Most of these low-income countries spend only 17% of their budgets as opposed to the recommended 20%. The impact of COVID-19 has also exacerbated the financing of education. Therefore what we advocate for is to ensure that governments have adequate resources to finance education”, she said during her opening remarks.

In this context, Liz Nelson, Director of Tax Justice and Human Rights at Tax Justice Network, highlighted the importance of the 4Rs framework of tax justice: revenue, redistribution, repricing and representation. Besides playing a pivotal role in generating revenue to fund public services, including education, she explained that  “redistribution, which is the second R, is there to curb vertical and horizontal inequalities: those inequalities between individuals and between two groups, so that it can rebalance economic power and political influence”.

Repricing is about “limiting public bads such as tobacco consumption or carbon taxing”. “There are risks of regressive aspects of carbon pricing for low-income or no-income households. Any regime must include social protections, transfers, benefits, dividends of some kind so it is not another drain on the available income”, Nelson said. The final R is representation, which is about tax helping to build a healthier democratic process. “Imposing progressive taxes, especially with an emphasis on direct taxes leads to governments being held accountable for their spending decisions. It opens opportunities for governments to provide for everyone through public services and the right to education”, she explained. 

The link between education, climate justice and tax justice

Climate change is devastating children's right to education, according to Teresa Anderson, Climate Justice Lead at ActionAid International. “We are within a context of extreme climate injustice where the countries and the communities that have done the least to cause the climate crisis are the very same communities that are most impacted. Particularly women are the ones who are the most disproportionately affected as a result of many structural, cultural and policy discrimination against women that make it harder for them to cope with climate change impacts”, she highlighted. “The costs of climate disasters also affect public funds available for public services, including education. And that's large because there's a huge cost of recovery and rebuilding after destructive climate disasters.That means that there is much less national budget available for education and public services. This is holding young people back in the long term.”

Quality education also requires ensuring better recognition and conditions to teachers

Anthonia Wulff, coordinator at Education International, underlined that the commitment within SGD4 is to make quality education available to all – and “when talking about quality, we are talking about quality tools, quality environments, safe learning environments and teachers who are trained, qualified and supported in the profession”. However, we are currently missing 69 million teachers globally, according to her. “There are struggles in a large number of countries to attract new people, a new generation of teachers into the profession. We need to acknowledge, because of the pandemic and related school closures there is more need for support from teachers to students as they are coming back to education.”

She also added that we are faced with a funding gap: a third of the 151 countries for which the TaxEd Alliance has data in the period of 2014 to 2019 did not meet the target of 4% of GDP and or 15% of national expenditure. “Educational International and many other civil societies have called for a commitment to not 4% but 6% of GDP, and not 15% but 20% of national expenditure”, she added. Besides, “public wage bill constraints and the fact that the International Monetary Fund continues to advise countries to introduce austerity blocks the recruitment of new teachers and it slows or freezes the salaries of the teachers and education support personnel who are already in the system”, she said. 

Perspectives of teachers from the USA

Jan Hochadel, from the American Federation of Teachers and a representative of the Public Services International, noted that the work that's mostly done by women, including healthcare, education and other social services, are under-resourced and often undervalued. “In our whole global society, our communities want public services and they often acknowledge that they are one of our greatest assets but what has gotten lost is the understanding that these services are necessary to protect the common good”, she said during her participation in the event.

“A true commitment to a just society means everyone fairly contributes to how society runs through a system of taxation that is equitable. What is happening is that corporations are gaming the system, dropping their earnings to a shell corporation to hide it because their main goal is not the common good, it is to make more wealth for their shareholders. They earn an incredible amount of money, hide from the public auditors in offshore accounts or in tax shelters and, as a result, our communities and especially women are suffering the consequences. Taxes as we all know are meant to be equitable so that all contribute to our common good including education”, she defended.

Perspectives from Nepal and Zambia

Professor Keshab Raj Khadka, representative of Tax and Fiscal Justice Asia, founding member of the Global Alliance for Tax Justice, said that “funding education doesn't come under the priority of governments. In South Asia, particularly Nepal, the total revenue of the government has been increasing year by year but the percentage of investment in education remains the same.”

In Zambia, the conditions are similar. “Salaries of women and teachers are inadequate and also the teacher to pupil ratio is quite high. The Gender Inequality Index ranks Zambia at 137 out of 162 countries as of 2019, showing how much inequality there is in Zambia in the context of the global. And obviously, there is a need for mechanisms, especially in our system to address some of these inequalities”, stated Ucizi Ngulube from ActionAid Zambia.

A way forward

According to Juma, “in order for these countries to finance education and achieve SDG4, they need to increase the 4s: 

1) the share of the budget to a minimum of 20%, international benchmarks take this at 15 to 20% of the National budget; 
2) the size of the budget by increasing the tax-to-GDP through progressive tax reform;
3) the sensitivity of the budget by ensuring that the budget allocation follows equity criteria;  
4) the scrutiny of the budget by ensuring transparency, participation, efficiency and accountability. 

“The COVID pandemic, wars and other crises should not be an excuse to cut spending on education. Through domestic resource mobilisation,  countries should be able to raise adequate funds to finance education, as well as other public services”, she explained.

Nelson also reaffirmed that solutions to address tax injustice is about creating policies and regulatory regimes for financial transparency, and underlined three measures that national governments should take in order to open space for generating more revenue and curb tax abuse. One way is an automatic exchange of financial account information to end bank secrecy.  There is a need for a comprehensive internationally beneficial ownership transparency through public registers so we can all see what's happening to end anonymous ownership of companies' trusts and foundations. Finally, country-by-country reporting from multinational companies to deliver accountability for corporate tax abuse. 

Wullf reiterated that “tax justice is the only way we can ensure a sustainable and sufficient budget for public education systems”.

“The truth is that you can try tax incentives and other options to help recruit or retain teachers; however, as Julie mentioned, nothing will be able to overcome the low salaries, the high cost of health care, and adequate retirement options if there is no fair tax structure. So I urge you to take a look at how funding is raised for your public structures and education systems, corporations paying their share of taxes for the common good and call out those who are not. Lobbying your elected leaders to change the narrative for communities, our children and our workforce”, called Hochadel.

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