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Does tax evasion by a multinational corporation breach the human rights of people in the countries where it operates? And can an international organisation of 45,000 individual lawyers and more than 200 bar associations use legal principles to fight poverty?

Those are the intriguing questions posed by a new research project launched by the International Bar Association (IBA) at the end of March. Its starting point is that an equitable taxation system serving the interests of the nation is a cornerstone of a healthy democracy. The IBA's human rights institute has appointed a task force, which is to publish a report next year.

That is, assuming the task force members can reach agreement on what their report should say. At a press briefing in London, they seemed to agree on very little. Some saw their role as campaigning against tax avoidance. They include Thomas Pogge, a professor of political science at Yale and chair of the task force. He estimates that one-third of all human deaths — 18 million a year or 50,000 a day — result from poverty-related causes.

His colleagues insisted that their role was not to campaign for change: their job was to find the facts and allow other international bodies such as the G20 summits and OECD forums to promote reforms. Sternford Moyo, a leading lawyer in Zimbabwe, was at pains to stress that the task force had chosen to focus on a particular cause of poverty. It recognised that there were other causes, such as corrupt regimes.

What struck me as interesting about Pogge's definition of the task force's remit was that he was happy to lump together tax avoidance, tax evasion and "illicit financial flows". Surely, though, tax avoidance is perfectly lawful?

Not when you are a multinational corporation operating in the third world, it seems. Tax avoidance may derive from a corrupt relationship between the company and officials in the country where it operates. That may allow the company to make its profits in one country and be assessed for tax in a more favourable jurisdiction where non-residents may pay little or no tax. A mining company, for example, might employ a large workforce who would enjoy better public services if the fruits of their labour were taxed in the country where they live. 

Is there any way round this? The mining company might be a subsidiary of a holding company with its headquarters in a first-world country. Might it be possible to tax the holding company and use the money raised to provide public services in the countries where it operates?

We are getting into deep waters here. Fighting poverty is clearly a noble aim. Nobody would justify fraud or corruption. But when we are dealing with the grey area between illegal tax evasion and legal but highly artificial methods of tax avoidance, where does a lawyer's duty lie? Should lawyers help their client to devise lawful methods of arranging their affairs that would minimise tax? Or should a lawyer be telling a client that the paltry amount of tax the client has paid in in one particular country is, in some way, too low? If the latter, how low? Which methods of tax avoidance should be eschewed? Which allowances should not be claimed? Employers have legal duties towards their staff. But do they have moral duties to pay taxes? If so, how much?

Putting the question from the workers' perspective, to what extent should individuals be able to enforce so-called economic rights? The UK is one of 160 parties to the UN's International Covenant on Economic, Social and Cultural Rights. Those states are required by international law to protect people's right to work for fair wages and "the right of everyone to an adequate standard of living for himself and his family". 

An optional protocol, not yet in force, would allow individuals whose economic, social and cultural rights have been violated by a state to complain to the UN committee that monitors the covenant. The UN committee on economic, social and cultural rights would then try to persuade that state to meet its obligations. In the meantime, though, the committee has reminded states of their responsibilities for the corporate sector. They must ensure that companies "do not impede the enjoyment of the covenant rights by those who depend on or who are negatively affected by their activities", it said in May last year.

Economic, social and cultural rights are not directly enforceable against governments in the same way as human rights. There is scope for debate on whether they can be justiciable at all. Multinational companies should be able to show their shareholders that they are acting as model citizens. But they should not be at risk of legal action purely because they operate in countries where people are still poor.

 
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