A/HRC/45/15 for businesses and high consumption taxes, that systematically discriminated against the poor.16 89. Therefore, as States reform their tax systems to try to increase their domestic revenues for development financing, the Special Rapporteur calls attention to the potential to use progressive tax systems, or systems that tax the wealthy at higher rates than the poor, as tools for advancing human rights and reducing inequalities (see A/HRC/26/28). The Addis Ababa Action Agenda contains, in its paragraph 22, a commitment to enhancing revenue administration through modernized, progressive tax systems, and in accordance with article 3 (1) of the Declaration on the Right to Development, States have the primary responsibility for the creation of national and international conditions favourable to the realization of the right to development. 90. In recent years, developing countries around the world have actually reduced income taxes on the wealthiest groups, while raising consumption taxes, such as VAT.17 In Latin America, research links high levels of inequality to the fact that the average corporate tax rate in the region fell from 43.9 per cent in 1985 to 26.8 per cent in 2015. The average general VAT rate in the region rose from 10.6 per cent to 15.2 per cent during the same period. 18 Proposed solutions for making tax systems more progressive relate to increasing the proportion of taxes that the private sector and wealthy groups pay through higher corporate tax rates, property tax rates, wealth taxes and financial transaction taxes, among others. The Special Rapporteur notes that civil society has called for strengthening tax administration services and for the formation of dedicated tax administration units for enforcing taxes on the wealthy.19 91. Regarding consumption taxes such as VAT, the rates unduly burden the incomes of women and people living in poverty because they pay higher proportions of their income on these taxes than the rich. Suggestions from civil society include exempting from such taxes basic foods, household fuel, feminine products, medicines and other goods that people living in poverty require, which could help to address the disproportionate impact. 20 The example of a Latin American country applying a 0 per cent VAT rate to medical supplies is a good practice in this area (see para. 49 above). 92. In this context, the Special Rapporteur reviewed the information received about tax holidays and special provisions that are meant to attract foreign investment (see paras. 44 and 50 above). While he understands the importance of attracting foreign investment for the development of domestic economies, he is concerned that in some cases such special provisions result in disproportionately low fiscal revenues, which hamper the ability of States to budget for social protection networks. The issue is particularly acute in developing countries, where income and property taxes do not generate considerable revenue. C. Meaningful community participation in financing for development 93. With respect to how financing for development, including resource mobilization and tax policies, translates to the experience of individuals and communities, the lack of meaningful participation in decision-making processes represents a significant challenge for implementing the right to development. The Special Rapporteur appreciates the above information regarding processes for consulting communities (see, for example, paras. 30, 58, 59 and 75 above). Yet he remains concerned that participation has not been budgeted for and 16 17 18 19 20 Center for Economic and Social Rights, submission to the Special Rapporteur. Isabel Ortiz, Matthew Cummins and Kalaivani Karunanethy, “Fiscal space for social protection and the SDGs: options to expand social investments in 187 countries”, Extension of Social Security Working Paper No. 48 (International Labour Organization, 2017), pp. 9–11. Initiative for human rights principles and guidelines in fiscal policy in Latin America, “Commentaries to the OECD call for public input on the tax challenges of digitalization, and possible solutions” (6 March 2019). Available at www.cesr.org/sites/default/files/OECD%20March%202019%20%20EN.pdf. ActionAid, Who Cares for the Future, pp. 80–81. Ibid., p. 86. 15