Part III Assessing resources • Taxes on wage income vs capital gains income. See if you can find the Palma ratio (a measure of economic inequality, calculated by dividing the income share of the richest 10% by the share of the poorest 40%14) for your country, pre- and post-tax to show how much the tax system redistributes. • How much money is lost through tax evasion or avoidance (including by multi-national corporations) or ‘illicit financial flows’?15 Then find the relevant financial data (refer to Chapter 6 on secondary data). Most of this will come from your finance ministry, national statistical office, audit institution or revenue authority. In addition, the World Bank, Asian Development Bank, IMF and OECD are also useful sources of relevant financial data. As described in this chapter, the overarching questions to be investigated are: How much revenue is being raised? How much revenue is being lost? Who is bearing the biggest burden of direct and indirect taxes? Note that when looking at tax policy it is important where possible to look at the full picture. So, for example, looking just at the VAT rate might not tell you a great amount, without also looking at how much tax is collected through other means, and how progressively, for example through income taxes, corporate taxes, or capital gains taxes (on investments). UPDATE FROM AHN Ahn calculates the national budget as a percentage of GDP, finding that it amounted to only 17%, compared to a regional average of 28%. Further, once she adjusted her figures for inflation, she finds that while GDP has grown significantly in the past five years, the national budget has remained stagnant, which means that, as a proportion of GDP, it had actually decreased. She then calculates the country’s tax burden, finding that it was just 8% of GDP. However, unlike other countries with low tax burdens, tax revenue was the main source of revenue in her country, making up almost 90%. Finally, Ahn looks at how equitable the tax system is. She finds that direct taxation (on income and assets) is very low, while the VAT (an indirect tax on consumption) represented over 75% of total tax collected. As a result, the poorest sectors of the population were effectively shouldering most of the responsibility for funding the State’s social programmes. Moreover, the country’s most profitable business sectors (many of them dominated by multinational corporations) enjoyed significant tax privileges and incentives, in many cases paying less overall tax than women who sell goods at the market. She also notes that the income tax system requires married women to file jointly with their husbands, in many cases disincentivizing married women working for pay and making it cheaper for the family to have just one breadwinner. She concludes that the tax system does not equitably generate the resources needed for the State to comply with its obligation to progressively realize the right to maternal health, without discrimination. 14 See: http://uncounted.org/palma/ for a video introduction to the Palma ratio. A low Palma ratio means lower levels of inequality. If Palma ratio is not easy to find, another measure of inequality called the ‘Gini coefficient’ is more widely available. See, for example, World Bank at: http://datatopics.worldbank.org/gmr/palma-index.html or UNDP at: http://hdr.undp.org/en/composite/IHDI. 15 You may be able to find this information from your country’s Finance Ministry or Revenue Authority. Also see UN ESCAP at: www. unescap.org/sites/default/files/FFD%20in%20Asia-Pacific%20-%20Highlights%20Action%20Agenda.pdf (page 8), or Global Financial Integrity at: www.gfintegrity.org/issues/data-by-country/. Chapter 11: Analysing resource mobilization | 117