A/HRC/26/28
excessive reliance on revenues from finite natural resources raises concerns not only about
long-term sustainability but also governance and accountability.102
73. The political processes and policy choices that guide the capture and distribution of
revenues from natural resource exploitation often determine whether they can be allocated
for the progressive realization of economic, social and cultural rights, poverty reduction and
social development. Good macroeconomic management of natural resources, such as
stabilization funds, exchange rate and monetary policies, and financial and industrial
policies that foster diversification are critical to enabling inclusive and sustainable
development from natural resource exploitation. 103 Decisions about natural resource
extraction must therefore be made with care, taking into account environmental concerns
and the rights of future generations while respecting the rights of the entire population.
F.
Enhancing international assistance and cooperation
74. In order to take effective and decisive action in these matters, concerted international
cooperation is necessary. Without absolving any State of its obligation to raise the
maximum available resources domestically to ensure the progressive realization of
economic, social and cultural rights, there are limits to national-level actions in the absence
of global reforms. Many States are undoubtedly hamstrung in their efforts to enact
progressive taxation and combat illicit financial flows that could fight inequality and
enhance the realization of economic, social and cultural rights.
75. Globalization and increased cross-border flows of goods and capital have vastly
increased the chances that one State’s actions or omissions may affect another State’s
ability to raise public revenues, and increased the ways and means that companies and
individuals can use to evade and avoid taxes.104 Illicit financial flows inevitably involve at
least two countries. The tax laws and structures of one State can therefore erode the
national tax bases of other States and hamper the application of progressive tax rates and
the achievement of redistributive goals, ultimately threatening the realization of rights.
There is a therefore a particularly urgent need for States to cooperate proactively on matters
of tax and fiscal policy. In particular, high-income States that enable or fail to tackle tax
abuse and illicit financial flows should shoulder some responsibility for the shortcomings of
the tax and public finance systems in developing countries and related poverty rates, lack of
enjoyment of human rights and economic inequalities.
76. While the rules of some international treaties address the handling of cross-border
financial flows, they are manifestly inadequate to deal with the nature of modern globalized
business. Owing to gaps in the interaction of different tax systems and, in some cases,
because of the application of bilateral tax treaties, income from cross-border activities may
go untaxed anywhere or be simply undertaxed.105 Transnational corporations are able to
shift profits across borders – including to tax havens where they have little or no real
commercial presence – in order to take advantage of tax rates that are lower than in the
country where the profit is made. This practice, which deprives both developed and
102
103
104
105
See for example Moore, “How Does Taxation Affect the Quality of Governance?” (see footnote 63),
p. 14, and Deborah Brautigam, Odd-Helge. Fjeldstad and Mick Moore (eds.), Taxation and StateBuilding in Developing Countries: Capacity and Consent, February 2008.
Katja Hujo, Mineral Rents and the Financing of Social Policy: Opportunities and Challenges (United
Kingdom, Palgrave, May 2012).
OECD, Harmful Tax Competition: An Emerging Global Issue, 1998, pp. 13-14; Africa Progress
Panel, Africa Progress Report (see footnote 97), p. 65.
OECD, Action Plan on Base Erosion and Profit Shifting, 2013, p. 10.
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