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WHAT CAN BE DONE
International tax experts, and standard-setters like the OECD and IMF,
acknowledge the damage caused by exemptions, loopholes and tax
havens, 367 but their commitment to solutions does not match the scale
of the problem. Powerful corporations and national and global elites have
connived to make international and national tax systems increasingly unfair,
thus worsening inequality.
THE LOW ROAD: THE GREAT TAX FAILURE
All countries, whether rich or poor, are united in their need for tax revenue to
fund the services, infrastructure and ‘public goods’ that benefit all of society.
But tax systems in developing economies – where public spending and
redistribution are particularly crucial to lift people out of poverty – tend to be
the most regressive, often penalizing the poor. 368 The poorest 20 percent of
Nicaraguans pay 31 percent of their income in tax, while the richest 20 percent
contribute less than 13 percent. 369 Indirect taxes like the Value Added Tax (VAT),
that fall disproportionately on the poor make up, on average, 43 percent of
total tax revenues in the Middle East and North Africa, and up to 67 percent
in sub‐Saharan Africa. 370
“
There are no politicians who
speak for us. This is not just
about bus fares any more.
We pay high taxes and we are
a rich country, but we can’t
see this in our schools,
hospitals and roads.
JAMAIME SCHMITT
BRAZILIAN PROTESTOR 371
CASE STUDY
THE UNEQUAL TAX BURDEN IN THE
DOMINICAN REPUBLIC
“
Bernarda Paniagua Santana in front of
her business in Villa Eloisa de las Cañitas,
Dominican Republic (2014).
Photo: Pablo Tosco/Oxfam
Bernarda Paniagua sells cheeses and other products in Villa Eloisa
de las Cañitas, one of the poorest and most under-served areas of
the Dominican Republic. Victor Rojas is the manager of a prestigious
company; he lives in one of the wealthiest areas of the country. Bernarda
pays a greater proportion of her income in direct taxes than Victor
because the rate of income tax in the country is almost entirely flat.
Children in Victor’s neighbourhood lack for nothing: they receive the best
education on offer and have a doctor visiting the house at the first sign
of a fever.
In contrast, Bernarda’s oldest daughter, Karynely finished high school
four years ago and now helps Bernarda sell cheeses. She is unable to
continue studying or find a good job because she lacks the necessary
IT skills, as there weren’t any computers at her school.
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