IACHR hearing: Regressive fiscal policies violate economic and social rights

As demonstrations against public service rate hikes and the influence of international creditors take place in Argentina, this hearing before the IACHR made clear that fiscal policy cannot be addressed without taking human rights into account.

While people in Argentina debate a return to borrowing from the IMF and a drop in subsidies to companies that provide vital public services, the Inter-American Commission on Human Rights (IACHR) held a regional hearing at which 12 organizations showed how the intensification of regressive fiscal policies exacerbates poverty and inequality. Such policies benefit privileged sectors and punish people of middle and low income, in line with other countries such as Brazil, Colombia and Peru, where social spending has been cut or frozen to the grave detriment of human rights.

The countries of Latin America and the Caribbean, the most unequal region in the world, do not take advantage of the enormous potential that fiscal policy has to achieve an equitable redistribution of wealth, the enjoyment of rights and the eradication of poverty. Some even adopt measures that worsen the situation of the poor. Whereas in the wealthiest countries of the world, fiscal tools – such as transfers and direct taxes – narrow the income gap by 36%, in Latin America the reduction amounts to just 6%.

In Argentina, the current government is cutting the budget for basic social programs while implementing regressive tax reforms and sustaining fiscal privileges. For example, non-contributory disability pensions were reduced in scope while retirement and family welfare benefits were cut. Funds earmarked for early childhood programs were either underutilized or reallocated, in a context in which around 50% of all children and adolescents are poor.

At the same time, there is a mismatch between land prices and property tax levies. In some sectors of the Buenos Aires Metropolitan Area, prices for vacant urban lots grew 26 times over between 2006 and 2016, while property tax revenue expanded by just 8. The decline in the relative weight of this tax encourages land speculation, harms the state’s capacity for service provision and public investment, and directly affects the right of the population’s most vulnerable sectors to a decent habitat. It is fundamental that fiscal policy be aimed at redistributing land value in favor of the majorities, deterring speculation and achieving greater transparency and more disciplined markets.

The IACHR has a key role to play in orienting states about how to ensure that human rights principles be incorporated throughout the cycle of fiscal policies, from the design and elaboration of tax policies, budgets and spending allocation and oversight, to subsequent evaluation with regard to rights.

For that reason, the organizations that solicited the hearing requested, among other things, that the Commission urge states to provide adequate information regarding their fiscal policies and call on the region’s human rights institutions to get involved in monitoring these policies. The commissioners present applauded the novel use of a human rights paradigm to address economic and financial matters.

For more information, see an executive summary of the joint report submitted to the IACHR by Asociación Civil por la Igualdad y la Justicia (ACIJ), Asociación Pro Derechos Humanos (Aprodeh), Center for Economic and Social Rights (CESR), Conectas Direitos Humanos, Dejusticia, Foro de la Sociedad Civil en Salud, Instituto de Estudos Socioeconômicos, Justiça Global, Ministerio Público de la Defensa de la Ciudad Autónoma de Buenos Aires, Plataforma DHESCA Brasil and CELS, with the support of Oxfam.