A/HRC/31/61 Independent Expert on foreign debt and by the former Special Rapporteur on extreme poverty.42 45. By reducing government revenue, tax abuse critically undermines the ability of many countries, especially the world’s poorest countries, to fulfil economic, social and cultural rights. Poor countries have much smaller tax revenue bases than developed countries, due to having smaller per capita GDPs, as well as the fact that they raise a much smaller proportion of their gross GDP as government revenue.43 As a result, many of these countries are dependent on external aid. For example, according to a UNDP report, in 2009 the least developed countries received approximately 24.1 per cent of total ODA, yet at the same time it has been estimated that as a group they lost 60 cents off every dollar of ODA to illicit financial flows. For some of these countries, illicit outflows were several times greater than the amount of ODA received. The report also found that illicit outflows averaged 4.8 per cent of the GDP of least developed countries, a large proportion of already vulnerable economies.44 46. A recent study by Global Financial Integrity also confirms that illicit financial flows have an outsize impact on the worst-off developing countries, including least developed countries and heavily indebted poor countries. The organization found that, of 82 developing countries studied, 20 per cent have illicit outflows greater than their ODA and FDI combined; for close to 25 per cent of countries, the ratio of illicit outflows to GDP is 10 per cent or greater; and, for 40 per cent of countries, the ratio of illicit outflows to total trade value was 10 per cent or greater. The study also shows that there is a strong connection between high levels of illicit outflows and the poverty gap (the number of people living below the poverty line), and an inverse relationship between high levels of illicit outflows and a country’s ranking on the Human Development Index. 45 47. Next to government revenue losses, tax abuse also strains the capacity of Governments that have the fewest resources to spare. The High-level Panel on Illicit Financial Flows from Africa has explained that finding the resources required to tackle tax abuse is difficult for many African Governments, even though they would pay off in the long run, since in the meantime they compete with other priorities for resource-strained Governments.46 48. It is also important to remember that tax abuse is problematic from a human rights perspective not only in terms of resources for fulfilling socioeconomic rights, but also because of its effects on governance and political institutions. High-profile tax abuse by the elite can lead to low tax morals and widespread non-compliance. It also undermines the legitimacy of the Government and the rule of law, while illicit funds and wealth concentrated in the hands of a small elite can increase the risk of regulatory capture and undermine the ability of the public to participate in political processes. 42 43 44 45 46 See A/HRC/28/60, para. 24; A/HRC/25/52, para. 25; and A/HRC/26/28, paras. 30-32, 61-62 and 7477. See T. Pogge, “Illicit financial outflows as a drag on human rights realization in developing countries”, in “Illicit Financial Flows: The Most Damaging Economic Condition Facing the Developing World”, Global Financial Integrity, pp.15-16 (2015). See “Illicit financial flows from the least developed countries: 1990-2008”, UNDP, pp. 3 and 16 (New York, 2011). See Spanjers and Foss, “Illicit financial flows” pp. vii-ix (footnote 31). See “Illicit financial flows”, Report of the High-Level Panel on Illicit Financial Flows from Africa, p. 59, available from www.uneca.org/sites/default/files/PublicationFiles/ iff_main_report_26feb_en.pdf. 13