A/HRC/25/52 international objectives, such as the target set by the United Nations Development Programme that 5 per cent of gross domestic product be spent for social purposes (such as basic education, primary health care and basic water).24 21. It should be noted, however, that these indicators focus only on Government expenditure and international assistance. They do not provide an indication of what a country’s available resources are, nor do they reveal the difficulties Governments face in raising the maximum available resources.25 22. Difficulties in mobilizing sufficient resources for the realization of economic, social and cultural rights arise at both the domestic and international levels. At the domestic level, obstacles include regressive taxation systems, generous tax incentive systems, weak tax administration and tax evasion and avoidance schemes.26 At the international level, a key obstacle is the volume of funds that countries lose each year through illicit flows. C. Capacity of States to realize human rights 23. It is widely accepted that illicit funds (including the proceeds of corruption, money laundering, tax evasion and other crimes) divert resources intended for investment in policies and programmes that contribute to the establishment of conditions for the realization of economic, social and cultural rights or to establish and strengthen institutions for the protection of civil and political rights.27 According to OECD, illicit financial flows have a “damaging impact” on the ability of developing countries to mobilize their own financial resources for investment, and “the most immediate impact of such illicit flows is a reduction in domestic public and private expenditure and investment, which means fewer jobs, hospitals and schools, less infrastructure – and ultimately less development”.28 24. The diversion of resources due to illicit financial outflows and the non-repatriation of those funds reduce the maximum resources available to the countries of origin for the progressive realization of economic, social and cultural rights. Put differently, illicit financial flows undermine the ability of States to comply with their obligation to devote the maximum available resources to the realization of human rights, particularly economic, social and cultural rights. 25. In its recent study on illicit financial flows, poverty and human rights, the International Bar Association made a pertinent observation. It has concluded that “actions of states that encourage or facilitate tax abuses, or that deliberately frustrate the efforts of other states to counter tax abuses, could constitute a violation of their international human rights obligations, particularly with respect to economic, social and cultural rights”.29 While this observation focuses on tax evasion, the Independent Expert considers that it is equally applicable to other forms of illicit financial flows, including those generated through corruption, bribery and theft of public funds. 24 25 26 27 28 29 Balakrishnan et al., Maximum Available Resources, pp. 2–3. See also United Nations Development Programme, Human Development Report: Financing Human Development (1991), p. 6. Tax Justice Network Germany, Taxes and Human Rights, Policy Brief No. 8e, February 2013, pp. 1–2. Ibid., pp. 2–3. See, for example, Farzana Nawaz, “Impact of international asset recovery and anti-money laundering efforts on poverty reduction and political accountability”, U4 Expert Answer No. 230, U4 AntiCorruption Resource Centre, 17 January 2010. OECD, “Measuring OECD responses”, p. 3. International Bar Association, Tax Abuses, p. 2. 9