A Taxing Journey: How Civic Actors Influence Tax Policy
Paolo de Renzio
238 pages, Bloomsbury Academic, 2024
A few years ago, while setting up the Tax Equity Initiative at the International Budget Partnership, we were confronted with an interesting conundrum. Interest in the role of taxation in promoting development was growing very fast, but most of the attention was concentrated at the international level, where stories about multinational corporations and wealthy individuals using tax havens and other loopholes to pay little or no tax were making the headlines (think of the Panama Papers). Hardly any evidence, on the other hand, existed on country-level efforts to address tax injustices, and on the role that civil society groups could play in shaping key decisions around making tax systems more equitable.
We set out to fill that gap. We spoke to many people and prowled the literature, and finally settled on seven cases from across the world—though there were many more—of civic campaigns addressing various tax issues, from a campaign to end tax amnesties benefitting rich individuals and corporations in Mexico to a push to raise taxes on alcohol and tobacco to finance universal health insurance in the Philippines, and from efforts to reform the tax administration agency in Guatemala following a corruption scandal to the struggle to overturn a tax on mobile money transfers in Uganda, a service that helps poor people in rural areas have access to financial resources.
Working with local researchers and with the actual groups promoting these campaigns, we documented how the campaigns unfolded, the challenges that they faced, and the impacts they were able to achieve. Their inspiring stories are now published in A Taxing Journey: How Civic Actors Influence Tax Policy (available as open access here). In the edited excerpt below, from the conclusion, you can see the main lessons emerging from the seven cases, which we hope can inspire and serve as guidance for other civic actors interested in ensuring that taxation contributes to more equitable development.—Paolo de Renzio
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This book has brought together what, to our knowledge, is the first set of in-depth case studies on civil society engagement in tax reform. In these case studies, we documented various campaigns by civic actors in seven countries that either proposed and pushed for specific tax reforms or opposed reforms that had been introduced by government. The evidence demonstrates that civic actors can help promote fairer and more equitable tax systems, generate additional revenues to finance public services like health and education, and improve tax transparency and tax administration to tackle tax evasion and outright corruption.
Throughout the book, we saw civic actors using a variety of narratives and advocacy strategies, and building different types of coalitions to overcome powerful interests and clear a path for reform. We also looked at the kinds of capacities they deployed, and how they were able to exploit specific political opportunities like elections and corruption scandals. Ultimately, the level of influence that their campaigns were able to achieve depended on the constraints posed—and opportunities provided—by the political context in which they were acting, and on their internal characteristics and skills, including technical, political and communications capacities.
We found that the most successful civic actors were those able to work simultaneously on different fronts, producing research, promoting public debate, mobilizing different actors and using their connections with politicians and bureaucrats to push for reform. While our case studies focus on the strategies around a particular campaign or reform, they also reveal the long history of many of the profiled organizations in building relationships with government and media and burnishing reputations as credible analysts and interlocutors. Groups as varied as Fundar in Mexico and SEATINI in Uganda have engaged in analysis and dialogue with legislators or government over many years and are recognized for their professionalism. Some organizations, such as ICEFI in Guatemala and AER in the Philippines, also have high-level political connections to past administrations or current government elites, and this relies on bonds of trust that were built over time and were not specific to any reform episode.
Long-term investment in civic movement building is essential for achieving long-term goals. “Coalition infrastructure,” as activists in the Minnesota case describe it, was built over many years. It effectively bonded together progressive groups with disparate interests on the expenditure side of the budget, and brought them into one common front around increasing revenue for basic services and helping progressive candidates win local positions. This is a reminder that we should avoid attributing too much importance to short-term decisions without considering longer-term ones: tactics pursued at a given moment are often possible only because of longer-term investments in reputations and relationships that can be drawn upon when the moment is ripe. These longer-term strategic choices are not always as visible when we look at specific reform episodes, but they are no less important. Of course, to be able to make such long-term investments, civil society organizations need support from funders that understand that tax reform is a long game.
Key lessons for civic actors
One of our main objectives was to provide useful insights for other civil society groups across the world that may be interested in engaging with tax reform. Lessons drawn from the experience of some of the pioneers in this field—i.e., the groups that our case studies looked at—provide hypotheses about how civil society tax advocacy can be more successful elsewhere. As we rely on a limited set of cases of partial success, we cannot draw any firm conclusions about impact. Nonetheless, we summarize here some of the main lessons that we see emerge from our case studies, structured around five broad themes.
On narratives
There are at least three types of narratives that civic actors can consider as a starting point for their work. By and large, each avoids getting into the technical details of tax reform. The first type of narrative is centered on fairness and equity. We find that specific appeals to the fairness or unfairness of a specific tax are somewhat more prevalent than broader appeals to the overall equity of the tax system, which is more complex and abstract. A second prevalent narrative is one that emphasizes specific expenditures and services that will be funded by tax revenue, whether through direct or more notional forms of earmarking. A third narrative focuses on transparency and accountability. There is no recipe for finding the right narrative or mix of narratives. CSOs should try to test messages that will make tax reforms more “relevant” and “salient” to a wide variety of actors and that are more effective than narratives utilized by opponents of progressive reform. This might involve using focus groups, polls, and rapid surveys, but it also demands nimble responses to unexpected opportunities that may arise to link tax reform to other topical matters. Finally, narrative development demands engagement with different types of media to disseminate and target key messages and gauge the responses to them.
On strategies
Successful civic action around tax reform requires engagement with a very wide set of actors and venues for reform, from executives to legislators and judiciaries. Media work is often crucial, but grassroots mobilization (though under-utilized in our cases) can be critical as well. CSOs with particular influence are able to play both “insider” and “outsider” roles, working with government on reforms, and pressuring government officials through mobilization, protest, lawsuits, and social media campaigns where necessary. Not all strategies can be used in all contexts, but civic actors should start with the assumption that they must diversify their strategies, pursuing multiple approaches, only some of which will eventually succeed.
On coalitions
Civic actors must build strong coalitions to overcome powerful opposition to their positions on tax reform. Opposition typically comes certain parts of government and of the business sector, and can be partly overcome by seeking alliances with other parts of government and other elements within the business community. In addition, tax reform generally requires broader coalitions of civic actors, including organizations that may work on tax and budget issues, but also many that do not, but are persuaded of the importance of tax reform for key services they care about. Tax advocates can also seek ways to better articulate how progressive tax reform can support a broader progressive policy agenda in persuading allies to join hands around tax. Our cases also find that brokering alliances with “unusual suspects,” such as religious organizations and professional associations, may help broaden coalitions to confront vested interests.
On capacities
Three types of capacity are key for tax reform advocacy: technical, political and communications capacities. Influential civic actors either have all three, or they form coalitions to complement their strength accordingly. Not all these capacities are necessary to have an impact on tax reform; mass mobilization alone can yield some influence, as the Yellow Vests case shows. However, if the goal of engaging in tax reform is not merely reactive, but to push for specific changes to make tax systems more progressive and effective, all these capacities are important. Our cases show that such capacities help civic actors to establish themselves as credible interlocutors, creating opportunities for more media coverage of their tax positions, or opening doors to build government capacity that can be leveraged for further policy engagement. Capacities are likely built up along the struggle for reform, so organizations should worry less about having all the capacity they need from the outset and more on ensuring that they are set up to learn from experience and bolster capacities along the way.
On political opportunities
As in other areas of reform, opportunities may arise (or disappear) at any time. Elections and scandals reliably provide opportunities for change, but not all elections or scandals will be conducive to progressive tax reform to the same degree, and one cannot predict in advance when the right moments will come. This suggests that civic actors must be ready, working over the longer-term to build capacity, media networks, and potential coalition partnerships that can be leveraged at opportune moments. Our cases suggest that it is the civic actors who have made long-term investments who are best able to act opportunistically when the moment for reform arrives.
Key lessons for other actors
The findings from our case studies suggest at least two additional lessons, one for governments and other state actors, and the other one for donors supporting civil society tax work.
For governments, legislatures, judiciaries, and other state institutions (e.g. bodies devoted to the promotion and safeguarding of public access to information) the main lesson emerging from our case studies is that civic actors can be important partners and supporters in tax reform processes. They can provide technical analyses and legal arguments, exercise political pressure through popular mobilization, help build and coordinate reform coalitions, and shape public opinion through debate and discussion in the media. Reformers within state institutions should see them as a resource to be drawn upon rather than a nuisance to be ignored. The struggle to make taxation more equitable—and to counterbalance the powerful interests that fight against it—needs as many supporters as possible to be successful.
For donors, the main lesson is the need to understand that civil society tax advocacy is often a long-term endeavor that requires flexible support. Long-term support that does not depend on delivering immediate results enables civic actors to build credibility and partnerships while awaiting political opportunities. Moreover, support cannot be tightly linked to a narrow set of activities to be implemented by a specific organization. Civic actors need to have the space to react and adapt to changing circumstances and to exploit unexpected openings of reform windows, and may need multiple, targeted kinds of support provided to different coalition partners. Only then can donors hope to achieve significant impact of the kind shown in our case studies. While this requires an important shift in donor approaches and practices, we believe it is necessary.
A final thought
We hope that these lessons can provide other civic actors with inspiration and motivation to pursue tax advocacy across different country contexts. In a world where inequality continues to grow, poverty is persistent, and wealthy individuals and corporations often get away with paying little in taxes, the role that citizens and CSOs can—and should—play in pushing for more equitable tax systems and better funded public services cannot be overstated. The pioneering organizations in our case studies have begun charting a path. Let’s hope many others will follow.