For Education Justice we need Tax Justice
By David Archer, Head of Participation and Public Services, ActionAid International
Globally there are 264 million children and young people out of school, most of whom are girls, and 617 million children who are in school but fail to learn even basic skills owing to the poor quality of education they receive.
More investment is desperately needed in basic education and 2018 could be the year in which we make a breakthrough.
This week education leaders from governments around the world will convene in Dakar, Senegal to make financing pledges to the Global Partnership for Education (GPE). Hosted jointly by President Macky Sall of Senegal and President Macron of France, the GPE hopes to receive pledges from donors of $3.1billion to support credible education sector plans across at least 65 developing countries. It is hoped that many developing country governments will also use the opportunity to make pledges to their own citizens to increase domestic financing for education. For many years civil society organisations have campaigned for developing countries to pledge at least 20% of national budgets to education — and movement towards this target is now a requirement for countries to receive support from GPE.
But 20% of a small pie is a small amount, and the time has come to focus on the much bigger gains for financing education that can be made by pledges to increase the overall domestic tax base of developing countries.
The recent revelations in the Paradise Papers show how aggressive tax avoidance by rich elites and multinational corporations are depriving government of desperately needed resources to fund public services. This is happening everywhere but is felt most acutely in developing countries who face some of the biggest challenges. Indeed, it is estimated that developing country governments lose at the very least $100 billion every year to the dodgy tax practices of multinational companies. Even more shocking is the way that companies demand tax holidays and other harmful tax incentives in exchange for investing in developing countries. ActionAid estimates that developing countries give away over $138 billion every year in harmful tax incentives — despite the fact that research shows that securing such incentives is near the bottom of the list of criteria that companies use for choosing where to invest.
The case of Pakistan illustrates the importance of taking action to address these harmful tax incentives. Shockingly, over 5.5 million children are not in school in Pakistan — and yet the government gives away $4 billion a year in harmful tax incentives. If just 20% of this sum was used to invest in education, then every single one of those children could be given access to a quality public school and the government could recruit 100,000 more professionally trained teachers. Meanwhile, in Senegal the government gives away harmful tax incentives that exceed the amount that it spends on education. Evidence also from Tanzania, Malawi, Mozambique and Nepal show the urgent need to make tax systems work better for financing education.
Of course, increasing the size of government budgets is not enough on its own. A fair share of the increased revenue needs to be allocated to education (at least 20% as noted above) and within the education sector it must be spent sensitively to ensure that it addresses the most crucial gaps, particularly in the provision of basic education.
Having a strong commitment to equity and focusing resources to reach the most marginalised children (whether girls, children with disabilities, minority groups etc) has proven to be the most effective way to improve the overall performance of education systems. But none of this makes any difference if the money does not arrive in practice in the most disadvantaged areas so additional efforts are needed to increase the tracking and scrutiny of budgets.
We need an integrated approach that addresses four S’s — the size of government revenues overall, the share spent on education, the sensitivity of allocations and the scrutiny of spending in practice. All four are important but the one that is too often missing from education debates is the first — the size of government budgets. It is time for education advocates to connect with tax justice campaigners — and to reach out to other sectors in the public service to build movements that can transform the financing of all public services. For this reason, in Dakar, ActionAid is convening a panel on tax and education where our Secretary General, Adriano Campolina will speak alongside the Executive Director of Oxfam, Winnie Byanyima; the President of the Global Campaign for Education, Camilla Croso; the Chair of the Global Alliance for Tax Justice, Dereje Alemayehu and the Director General of the Norwegian government’s aid programme Jon Lomoy. This is an unprecedented alliance of forces calling for everyone to understand the links between education justice and tax justice.
The Global Partnership for Education itself can play a pivotal role in this breakthrough by supporting education ministries to engage in the truly strategic financing debates with Ministries of Finance and the IMF. This is the way to convert the short term and unpredictable income from aid into a long term sustainable source of income for financing public education systems. At present the average low income country has a tax to GDP ratio of just 16% — whilst the average OECD country has a tax to GDP ratio of 34% — and GPE needs to be a champion of transforming this depressing picture. More than that, GPE can encourage those private sector companies who are keen to support education, such as those in the Global Business Coalition for Education, to be in the forefront of setting good standards, agreeing to country by country reporting of their profits and refusing to accept harmful tax incentives in developing countries.
Finally, everyone involved in GPE can make a huge contribution by joining the call for a new, representative UN tax body that is empowered and resourced to set and enforce global tax rules — to put an end to the scandalous scale of plundered resources hidden away in tax havens and to promote progressive forms of global taxation. At present tax rules are set by the club of rich nations — the OECD — and developing countries have no voice.
Let us hope that events in Dakar can mark a turning point, where the education community starts to stand up with a united voice for tax justice.