Tax Policy and Administration: A Rare Consensus on Foreign Assistance Reform?

By: Andrew Wainer, Director, Policy Research at Save the Children

Even as Mark Green was sworn in this month as USAID Administrator with widespread support, President Trump’s America First-inspired budget and its proposed 32% cut to foreign assistance continues to provoke anxiety for much of the US development community.

In the wake of the proposed cuts, development experts are weighing in with foreign assistance reform proposals in an attempt to shape the looming reorganization expected in coming months.

While the foreign assistance budget cuts proposed by the Administration conflict with the vision put forth by most external experts, there is at least one point of emerging common ground between the Administration and development analysts: The importance of foreign assistance in strengthening developing nations’ domestic resource mobilization (DRM) – building partner nations’ tax policy and administrative capacity to better finance their own development.

For its part, the Modernizing Foreign Assistance Network (MFAN) has issued guiding principles on effective foreign assistance emphasizing that USAID, must, “Remain independent; control its policy and budget authorities; operate with accountability, transparency, and efficiency; have a selective and focused presence; and be sufficiently resourced.”

Other analysts and development organizations have largely been aligned with this general vision for foreign assistance reform and have also emphasized the role of DRM.

In a report published last month, the Center for Strategic and International Studies’ (CSIS) included DRM within its three goals for US development. Specifically, CSIS recommends supporting, “Domestic resource mobilization efforts to gradually transfer U.S. assistance onto host-country governments,” and, “Transfer[ing] the delivery of direct services to partner country budgets through a series of programs aimed at improving their public financial management and efforts to mobilize domestic resources.”

A recent report from the Center for Global Development (CGD) states, “Two big shifts will define development engagement in the next decade,” one of which is, “The shift of development financing in stable states away from aid and toward private and domestic financial flows [which includes DRM].”

DRM: A Trump Administration Priority

DRM could also emerge as a Trump Administration emphasis, as stated by Trump-nominated USAID Administrator Mark Green.

During his testimony before the Senate Foreign Relations Committee, Administrator Green cited three overarching priorities for USAID. One of them included DRM: “We should emphasize programs that incentivize local capacity-building and implementation, mobilize domestic resources and ensure that our host-government partners have ‘skin in the game,’” Green told the committee.

The Addis Tax Initiative

Consensus in Washington is rare. How can it be harnessed in the case of DRM?

This summer, Save the Children joined representatives from more than 40 countries at the Addis Tax Initiative’s Tax and Development conference to discuss how to coordinate and deepen DRM in the developing world. The conference brought together government officials from donor and partner nations, civil society, and research institutions, among others. Civil society organizations emphasized several issues relevant to the US development community:

  • DRM efforts should better engage civil society organizations. DRM efforts often center on technical assistance between a development agency (for example USAID) and a partner country’s revenue authority (similar to the IRS). While this link is central, it isn’t always enough to strengthen accountability and governance while also increasing revenue. Educating taxpayers about the benefits of taxes is an important component of increasing domestic revenues. Civil society can also bring new ideas to the tax conversation and help to ensure that revenue mobilization is done equitably and transparently. In many ways, civil society organizations are the best positioned to support tax transparency and accountability central to a strong citizen-state compact.
  • DRM work should lead to better public services. Enhanced tax collection and compliance is not an end unto itself. If governments are not spending increased revenues effectively and equitably, then they will not benefit citizens. As the World Bank states, “Domestic revenues can lead to improved development only if they are translated into productive and beneficial public expenditure. For this reason, both sides of the fiscal equation—revenue and expenditure—need to be examined together.”
  • DRM investments should be directed at the subnational level. Tax revenue and expenditure should be part of a broader decentralization strategy if it is to meaningfully increase resources for local social services and enhance government transparency and accountability for citizens. Local-level tax revenue and expenditure is key to both enhancing governance – since citizens interact most with local branches of government – and for enhanced service delivery – since services such as healthcare and education are often delivered at the local level. National tax-to-GDP ratios are not sufficiently nuanced to describe how tax is impacting citizens where they live and work. DRM success must also be assessed by examining impact at the local level.

In an uncertain foreign policy environment tax policy assistance is recognized as an essential tool to improve governance and self-sufficiency, and to increase resources for development. To maximize its value, donors and others should support a strong role for civil society at both the international and local levels so that DRM is not only comprised of technical assistance, but includes societal buy-in to ensure that development gains are sustained over time.

Sorghum bags being dispatched from Jijiga to drought-affected areas in the Somali region of Ethiopia. Photo by: U.S. Embassy Addis Ababa / CC BY-ND

Foreign aid works for us all

Sorghum bags being dispatched from Jijiga to drought-affected areas in the Somali region of Ethiopia. Photo by: U.S. Embassy Addis Ababa / CC BY-ND

Originally published on Devex.com

Leaked documents reported this week suggest the Trump Administration would like to cut foreign aid by more than 30 percent and possibly merge the U.S. Agency for International Development with the State Department. This proposal comes despite the fact that we are facing the worst humanitarian crisis since World War II—there are more people fleeing war and persecution than ever in history—and famine conditions are threatening parts of the Middle East and Africa.

I’ve recently heard some critics say that foreign aid does not work. This could not be farther from the truth. Dollar-for-dollar, it is one of the most effective uses of our taxes. One penny of every dollar in the total U.S. budget goes to helping families in other countries—a small investment that saves lives and helps millions of people every year. Strong U.S. leadership during the last 25 years has helped cut extreme poverty in half and led to half as many children dying around the world from preventable illnesses like malaria, diarrhea and pneumonia. We need to build on this progress rather than allow it to lapse.

America currently spends nearly 50 percent less on foreign assistance, as a percentage of gross domestic product, than during the Reagan administration. Further reducing this budget would hinder the U.S. government’s ability to help respond to disasters – natural and man-made – including those that know no borders, like the recent Ebola and Zika outbreaks. Being prepared to respond quickly to the next disease is just as critical for U.S. citizens as it is for those at the epicenter of the outbreak.

Countless times, I’ve seen firsthand how U.S. foreign assistance works and saves lives. I recently visited Jordan, a country that is committed to welcoming families fleeing violence and persecution in neighboring countries. More than 650,000 Syrian refugees, half of them under the age of 18, are now in Jordan, and the U.S. provides significant foreign aid for refugee programs in the country. That support feeds young refugee children, offers children the chance to get back into school after years of being away from home and provides vocational training for Syrian youth to give them hope for a productive future. This U.S. funding is essential if we are to avoid a lost generation of young people who can eventually help put their country on a better path.

In addition, today nearly 20 million people in Somalia, Nigeria, Yemen, and South Sudan face the threat of starvation, and famine has already been declared in South Sudan. Save the Children is on the ground working with partners, including USAID, to provide lifesaving water, food and treatment to these children and families whose lives depend on our help. U.S. foreign aid is critical for preventing and addressing famine, yet proposed budget cuts would eliminate funding for the Famine Early Warning System Network (FEWS NET) that helps us prevent and respond faster and more efficiently to famine conditions around the globe.

Preparing for drought before its worst effects take hold is on average three times more cost-effective than emergency response, as illustrated by studies in Ethiopia and Kenya. Pair this with the World Bank study that calculated disaster risk reduction saves $4-7 for every $1 invested, and it’s clear that our foreign aid investments are not only the right thing to do from a humanitarian perspective but also from a fiscal perspective. To put it simply: an ounce of prevention is worth a pound of cure.

Promoting health, education, gender equality and economic opportunities for communities around the world leads to more stable societies, which are critical to our national interests. A group of more than 120 retired generals and admirals agree and sent a letter to Congress in February stating, “The military will lead the fight against terrorism on the battlefield, but it needs strong civilian partners in the battle against the drivers of extremism – lack of opportunity, insecurity, injustice, and hopelessness.”

The international affairs budget is a triple win: it helps U.S. economic and national interests, it helps people prosper, and it saves lives. These proposed budget cuts and the folding of USAID into the State Department would deeply hurt America and our neighbors. We all need to do our part by telling our members of Congress that this funding is critical to our wellbeing.

Facing Challenges in the United States, Tax Policy Reform Thrives Abroad

Written by Andrew Wainer, Director of Policy Research, Policy and Humanitarian Response

This spring, Republicans are turning to tax reform, reaching for the policy win the Trump Administration badly needs. Like health care, tax reform is fraught with political pitfalls, making reforming the US’ outdated and complicated tax code another 2017 uphill policy battle.

But even as Congress and the Administration brace for conflict on domestic tax policy, US assistance to developing nations to improve their own tax systems has enjoyed years of bipartisan support.

Multiple US international development agencies – including USAID, PEPFAR, MCC, and the Treasury Department – provide tax policy and administration support to developing nations. The US is the seventh largest provider of domestic resource mobilization (DRM) assistance – as tax reform is called in the development arena. The goal of this advising and capacity-building is to help developing nations harness their public finance systems to better fund their own development and rely less on international development assistance.

Meeting Their Own Development Needs

Years of investment by developing nations themselves – with assistance from donors – has paid off as low-income nations have increased their tax-to-GDP ratio from about 10% during the 1990s to 15%; lower-middle income nations have increased the ratio from about 15% to 20%. This means developing nations are creating a larger tax base and generating more of the money needed to invest in their citizens’ health, education, and other development goals.

Getting tax reform right can have a major economic impact for developing nations: If India adopts its own current tax simplification proposal, it could inject an additional 2% of GDP into the massive South Asian economy by simplifying the tax code for businesses and individuals.

US support for tax reform in the developing world deserves continued support from Congress, not only on self-sufficiency grounds, but also in terms of strengthening governance in a world where the strong rule-of-law is increasingly viewed as the keystone to prosperity.

President Trump himself has emphasized fair taxation and repatriation of US corporate taxes as part of his domestic economic reform package, saying “I know a lot of bad people in this country that are making a hell of a lot of money and not paying taxes.”

And if we can get beyond the stigma of the word “tax,” supporting foreign assistance for DRM includes principles central to both the Democratic and Republican agendas. At its best, DRM assistance includes the following tenets:

DRM is Market Friendly

One of the primary goals of domestic resource mobilization (DRM) assistance abroad is creating the optimal conditions for market-based economic growth. DRM isn’t about soaking the rich, rather it’s aimed at ensuring that tax policy facilitates inclusive economic growth and development. DRM is about creating an attractive environment for domestic and international investment.

DRM Engages Citizens

As DRM enhances states’ capacity to collect and spend revenues, it also provides a platform for citizen engagement in public policy. DRM strengthens the citizen–state compact by ensuring that citizens have the opportunity to influence tax policy formulation and implementation. The OECD has stated, “taxation is integral to strengthening the effective functioning of the state and to the social contract between governments and citizens.”

DRM Reduces Bureaucracy

Part of making tax systems platforms for economic growth, rather than roadblocks, is reducing bureaucracy. DRM assistance includes quantitative goals of raising a developing nation’s tax-to-GDP ratio, but it also integrates the qualitative measure of how a tax system raises money, not just how much it raises.

DRM is about making paying taxes easier for citizens – removing red tape. This can include introducing information technology to make tax collection more efficient and less prone to corruption, simplifying the tax code, and providing better customer service to taxpayers by processing tax returns more quickly.

DRM Enhances Accountability

Of course, sometimes corrupt elites and organizations do game tax systems and part of increasing citizen engagement in tax policy includes increasing the fairness and equity in taxation. US DRM assistance to developing nations includes supporting policy changes to close loopholes for those who don’t pay their fair share.

While US’ DRM technical assistance is a tiny part of the overall US international development budget – for example $20 million per year at USAID – there is growing recognition of the need for donors and developing nations to invest more.

The US government momentum on DRM for developing nations is promising. To maintain it, we’ll need to solidify the transformation of “tax” from a curse word to a widely recognized means to increase citizen engagement in fiscal governance while building a supportive environment for inclusive economic growth.

Guatemala Blog Post 2

Bipartisan McGovern-Dole Program Transforms Health and Education in Guatemala’s Western Highlands

By Dan Stoner, Associate Vice President of Education and Child Protection at Save the Children.

In August 2016, I had the privilege of visiting Save the Children’s IDEA project in Guatemala with Jonathan Cordone, the then Deputy Undersecretary of the US Department of Agriculture (USDA).

IDEA is a USDA project funded through the McGovern-Dole Food for Education Program. IDEA is one example of the many international humanitarian and development programs that would be a casualty of the President’s drastic proposal to cut U.S. international affairs funding by roughly one-third.

The justification for the cut was that the program lacks evidence that it is being effectively implemented to reduce food insecurity, but our Guatemala program shows that it is indeed making a difference in the lives of children.

Guatemala Blog Post 1

Guatemala’s Western Highlands

In the Guatemalan Western Highlands, more than 60% of indigenous children are stunted and more than half are malnourished.  Through the IDEA project, Save the Children feeds more than 43,000 school age children per year, directly addressing food insecurity in the most impoverished region of Guatemala.

A recent independent evaluation of the IDEA program indicated that as a result of the school meals, absenteeism in program schools dropped from 20% to 5% in less than 2 years.[1]  The same evaluation found the number of children who now pay attention in class increased by 40%.  When asked why more children were paying attention in class, teachers said “They are no longer hungry.”

The McGovern-Dole Program

The McGovern-Dole program goes beyond just feeding children who otherwise would not have, in many cases, even one nutritious meal a day.  It integrates health, nutrition, and education interventions that enable children to reach their full potential.   The IDEA program has transformed barren cinderblock classrooms into engaging environments (as seen below) designed to cultivate children’s curiosity and encourage their love of learning. As a result of the USDA McGovern-Dole program, these children have learned to read in two languages: the indigenous K’iche’ language and Spanish.

While the program is based in more than 260 rural schools in Quiche province, its impact extends beyond these communities.

Ministry of Education officials who have seen the program work, have adopted program methodologies and manuals from the IDEA program to be used in all of Guatemala’s public schools. The government officials were so supportive of the program that they asked Save the Children to implement it in schools that were more remote than originally planned and paid for the additional costs of doing so. This support and buy-in from the local government is a testament to the impact of USDA McGovern-Dole programming on the most vulnerable populations in Guatemala.

Guatemala Blog Post 3

In this story I am talking about one school, but one that is as vibrant as any I have seen in my 25 years in international development. The IDEA program reaches 260 schools.   McGovern Dole has 46 active programs around the world.  USDA and USAID reach millions of children in schools just like these every year.

The impact in the Western Highlands is an example of how the McGovern-Dole program reduces hunger and improves literacy and primary education globally. Each year, the McGovern-Dole program feeds over 3 million children and their families around the world while providing comprehensive education interventions designed to ensure the future success of today’s school-age children.

This is just one example of a proven bipartisan program that gives children around the world a brighter future.  At less than 1% of the entire federal budget, slashing international affairs won’t make an impact on the deficit, but the impact on children will be devastating. Congress must continue to invest in programs like these – they’re worth every penny.

 

[1] Asociacion De Desarrollo Organizacional Communitara ADOC. Mid Term Evaluation of IDEA Project, SC/USDA. Aug. 2016. Guatemala. Pg 37

Not Business as Usual: Nurturing Country Ownership in Rwanda

By Andrew Wainer, Director, Policy Research. Department of Public Policy and Advocacy.

Akazi Kanoze is a USAID-supported project that includes strong partnerships with the Rwandan private sector to develop marketable skills for youth including welding.
Akazi Kanoze is a USAID-supported project that includes strong partnerships with the Rwandan private sector to develop marketable skills for youth including welding.

As the Trump Administration turns its attention to international development policy, it should endorse and deepen bipartisan principles – such as country ownership – that promote stability in developing nations and security for the United States.

As illustrated in the recently published report The Power of Ownership, USAID and the Millennium Challenge Corporation (MCC) operate a variety of projects that exemplify country ownership principles and practices. The report, by Save the Children and Oxfam America, showcases examples in Ghana, Indonesia, Jordan, and Rwanda where ownership promotes stability and self-sufficiency.

Over the long term, ownership establishes the foundation for new types of relationships with the United States. Eleven of the U.S.’s closest trading partners are past recipients of U.S. international assistance, and the developing world is one of the largest markets for U.S. exports.  Rwanda’s transition over the past 30 years illustrates the importance of country ownership in development.

The Rwandan Genocide

In 1994, the Rwandan Genocide lasted 100 days without international intervention before it was halted by the Rwandans themselves, when the Rwandan Patriotic Front (RPF) entered the country from neighboring Uganda.

By the time the genocide ended, an estimated 800,000 to 1 million people were dead. In the wake of the genocide, some estimated that Rwanda was the poorest country in the world. Findings from a 1995 survey of Rwandan children found that during the genocide 90 percent had witnessed killings, 35 percent lost an immediate family member, and 15 percent hid under a corpse.

Today it is a nation transformed. The World Bank rates Rwanda as the third best business climate in Africa and notes its “remarkable development success over the last decade which includes high growth, rapid poverty reduction and, since 2005, reduced inequality.”

Rwanda’s journey from the 1990s genocide to stability and economic growth owes much to the nation’s partnership with international donors. As the Power of Ownership report demonstrates, the Rwandan private sector plays a strong role in the country-led, inclusive growth the country has enjoyed in the decades following the genocide.

Akazi Kanoze

Akazi Kanoze – which means “a job well done” in Kinyarwanda, Rwanda’s native language – was designed to contribute to the national goal of generating 200,000 off-farm jobs annually for the country’s burgeoning population of unemployed youth. Since its inception in 2009, it has provided vocational skills and work readiness training to tens of thousands of Rwandan youth.

While it was launched in urban areas, it has expanded into the Rwandan countryside, and is now integrated into the government technical and vocational education and training (TVET) even reaching refugee communities on Rwanda’s western border.

Akazi Kanoze, started as a partnership between the U.S.-based NGO Educational Development Center (EDC), and key Rwandan employers in the construction, welding, hospitality, and childcare sectors, among others.   Working with civil society and business leaders, EDC helped strengthen and expand Rwanda’s TVET infrastructure and curriculum to better equip Rwandan youth to enter the workforce.  The project identified youth capacity gaps and labor market needs that were then addressed by Akazi Kanoze job skills training modules. The project design included a Rwandan business advisory council to ensure strong lines of communication with the local private sector and insight into the country’s labor market needs.

Today, the project continues in another form.  USAID and EDC worked with local staff to create an independent Rwandan nonprofit – Akazi Kanoze Access – to carry the project forward, diversifying funding beyond USAID.  With the financial support of a private foundation, Rwandans are now taking full leadership over the project.

Inspired by USAID’s Local Solutions initiative, Akazi Kanoze demonstrates one way that country ownership principles can be translated into action, helping to ensure that foreign assistance builds self-sufficiency rather than dependency.  Click here to learn more about Akazi Kanoze and watch a short video featuring the project.

To Reach the World’s Most Excluded Children, Data is Fundamental

nora-oconnellNora O’Connell

Associate Vice President of Public Policy & Advocacy at Save the Children U.S.

December 12, 2016

As it’s sometimes presented, the concept of foreign assistance data transparency provokes drowsiness, but accurate and timely data can be of grave importance, particularly in humanitarian emergencies and with marginalized groups.

The importance of data was demonstrated during the 2014-2015 West Africa Ebola outbreak, where data provided at the right place and the right time helped save lives.  When doctors first started treating patients, the lack of electronic medical records hindered patient care.

To address the lack of data, Save the Children and Doctors Without Borders adapted an open-source platform to confront the outbreak by providing timely information on everything from the direction the outbreak was moving to which doctors were due for payment.

Recently, as part of the speakers’ panel for the release of a Friends of Publish What You Fund (PWYF) report, I emphasized that, like the example above, data can have real – and sometimes life and death – consequences. I know this through my own work with Save the Children and the communities that we engage around the world. At Save the Children we see the role of data in development as central for two primary goals:

  • To better inform development and humanitarian decision making, and
  • To strengthen accountability, particularly for marginalized groups including girls and refugees

Better and timelier development data has acquired an increased impetus globally as a crucial tool to achieve the 2030 Sustainable Development Goals (SDGs) and actionable data is foundational for Save the Children’s Every Last Child campaign aimed at the world’s most excluded children, including migrants and refugees, ethnic and religious minorities, and girls. To make the case for these children and to create a strategy to realize this goal, we need disaggregated data.

As the PWYF “How Can Data Revolutionize Development” report states, U.S. foreign assistance broadly has made important gains in aid transparency, but continued progress – from both U.S. foreign assistance agencies and development implementers – is required to make timely, accurate, and user-friendly data central pillars of U.S. government development policy and practice.

As the world’s largest bilateral donor, the U.S.’ commitment to generating and disseminating development data would help set an international benchmark for the global development community. On that count, while the U.S. has made progress, we still have a way to go to become a global leader. To achieve enhanced U.S. data transparency, the report cites three areas of focus:

  • Implement the U.S. commitment to publish humanitarian aid data
  • Invest in gender equality through publication of robust gender data
  • Improve U.S. aid transparency for stronger U.S. global development

The focus on gender disaggregated data is particularly important for Save the Children’s Every Last Child campaign, which includes girls as one of the largest excluded groups of children globally.

As the PWYF report states, “Whether seeking to increase equality, economic growth, peace and security or improve outcomes for children and families, supporting women and girls are considered one of the best investments for a country’s future.” But data relevant to gender equity is often nonexistent. The report continues, “Although gender-specific and disaggregated data are critical tools…the state of this data is woefully underdeveloped and difficult to use.”

The story of data to help identify and target vulnerable groups is mixed. As Brookings Institution Senior Fellow George Ingram stated at the event, “Transparency moved from a little discussed concept to being the norm in what we want to achieve.” But to sustain progress, U.S. development agencies and implementers should continue to make data transparency a priority – particularly in the world’s most fragile nations and among the most vulnerable and excluded groups.

Realizing the power of ownership

power-of-ownership-sharegraphics-esty

This post was co-authored by Tariq Ahmad, Aid Effectiveness Researcher at Oxfam America, and Nora O’Connell, Associate Vice President, Public Policy & Advocacy at Save the Children.

As the world plans for the transfer of US political power, we should remember that not all US government policy should be subject to a partisan gladiatorial battle. Particularly on international assistance policy, there is a decades-old foundation of bipartisan comity on which to build.

The bipartisan embrace of country ownership – defined as development driven by local citizens in collaboration with their own governments – is one specific policy trend that deserves continued institutionalization and fortification, both to strengthen US relationships abroad, and to continue the world’s progress toward the elimination of extreme poverty.

Oxfam and Save the Children know from our own experiences that building local ownership into international assistance is one of the best ways to support sustainable and lasting development results. Ownership can strengthen a government’s ability to provide needed services to their own people and create political space for a country’s most marginalized citizens to hold their own governments accountable. Ownership’s greatest potential is its ability to tap into the natural drive – and resources — of citizens themselves to lift their communities and countries out of poverty.

This week, as part of Oxfam and Save the Children’s long-standing efforts to enhance local ownership of US development assistance, our organizations are jointly launching, “The Power of Ownership: Transforming US Foreign Assistance.” The core of this research report is an analysis of USAID and Millennium Challenge Corporation (MCC) development projects in Ghana, Indonesia, Jordan, and Rwanda that exemplify ownership best practice in US foreign assistance.

The examples in the report not only highlight the value of pursuing ownership, but also provide analysis, findings, and recommendations for practitioners and policymakers who want to strengthen the US’s commitment to ownership. To build on the bipartisan record of success that started with the administration of George W. Bush, and ensure the effectiveness of US development investments, it’s imperative that the next administration continue along the road to reform.

A Global Imperative

Though it accounts for less than 1 percent of the US federal budget, US foreign assistance provides dividends in the form of enhanced U.S. national security and economic prosperity. Using foreign assistance to fight extreme poverty globally creates more stable, prosperous, and democratic countries that are better allies and export markets for American businesses.

While tremendous progress has been made – extreme poverty has been cut by more than half – much more needs to be done.  Continuing to reform these programs can make this small investment can go even further.

How does that work? An ownership approach requires that US international assistance build local leadership and resources into programs, which means that we are not working alone — our investments are being leveraged by local resources, and the results are more likely to be sustained once the US leaves. America should not doing for other countries – it should be helping countries to do for themselves. It should not take on the responsibility of other governments to their people – it should help citizens hold their own governments accountable for their needs.

We witnessed the power of country ownership up close in Indonesia. In a low-income neighborhood in busy Jakarta, we met Ibu Heli, a community health volunteer who goes door to door, scanning her neighborhood for people infected with tuberculosis (TB). She then connects people with TB to local health services and helps them understand the importance of long-term care. USAID provided her with the training to be able to spot TB and respond to it in her community.

What makes this USAID project different is its direct partnership with a local health NGO that has a vast, existing network of devoted health volunteers like Heli. By focusing on existing systems, USAID was able to leverage what was already there to strengthen the “front-line” of Indonesian anti-TB efforts. And the flexibility embedded in the project meant that local organizations were able to adapt tactics based on the local context, which were sensitive to the stigma associated with the disease.

The transition to a new US administration is an opportunity for US international assistance to expand this approach, building genuine partnerships in developing countries and working through people like Heli in Indonesia. If we are to strengthen US security and global prosperity, more local leaders like her need to be given the responsibility and resources to lift their communities out of poverty, creating the space for vibrant citizen-voice that hold governments accountable.

Read the report and learn more about the research at powerofownership.org.

 

Death and Taxes in Central America

By Andrew Wainer, Director of Policy Research at Save the Children U.S.

The Panama Papers revealed global elites’ maneuvering wealth around – and through – a porous international tax infrastructure. While international tax malfeasance is not always strictly illegal, it also isn’t necessarily victimless, particularly in the developing world.

The impact of tax avoidance is particularly stark in the Northern Triangle – Guatemala, Honduras, and El Salvador – where regressive taxation and the lack of the rule-of-law are grimly intertwined.

Global Financial Integrity (GFI) estimates that illicit financial flows (IFFs) – international, illegal movements of money – cost developing nations $1.1 trillion in 2013. According to GFI, these cash outflows from the developing world, “Have a terrible, subversive impact on governments, victims of crime, and society.”

Latin America remains the most unequal region in the world and the Northern Triangle is notoriously poor at taxing and spending equitably. While some Latin American nations employed progressive taxation to reduce income inequality during the 2000s, regressive tax policy in Central America exacerbated its already severe inequality.

In recent years, Guatemala had the lowest (12%) tax-to-GDP-ratio of any country in Latin America and Honduras and El Salvador were only slightly better. By comparison, Brazil’s tax-to-GDP rate was 36% and Denmark’s was 48%.

“The World’s Epicenter for Extortion”

In addition to regressive tax structures, Central America is also plagued by some of the world’s highest crime rates, including extortion. InSight Crime, an organization that analyzes organized crime in Latin America, calls the Northern Triangle, “The world’s epicenter for extortion.”

And poor communities are disproportionately its victims. According to, La Prensa newspaper Salvadorans pay $400 million annually in extortion, Hondurans pay $200 million, and Guatemalans pay $61 million.

Poor Central Americans caught in the middle of formal, legal tax structures that privilege the rich and illegal practices that target the poor. Small businesses are typically more vulnerable to extortion because they often can’t pay for private security services. El Salvador’s small business association states that small business owners pay $30 million per month and that 10 small business close each month due to extortion.

But the economic impact of extortion is comparatively mild compared to the violence that surrounds it. Poor Central Americans can risk their lives if they refuse to pay the region’s gangs: La Prensa states that more than 300 bus drivers were killed in recent years due to extortion.

Taxation Critical to the Citizen-State Compact

Strengthening the citizen-state compact and the rule of law will take years, but in recent months there have been promising initial steps – within Northern Triangle itself and with U.S. assistance to the region – toward redirecting the tax system to the benefit the region’s most vulnerable citizens:

 

  • The “Plan of the Alliance for Prosperity in the Northern Triangle” – developed by the Northern Triangle nations with the support of the United States – includes strengthening financial management as one of the plan’s four pillars. It states, “Public spending must be transparent, efficient and effective.”

 

  • In 2015, the Millennium Challenge Corporation signed a $28 million agreement with the government of Guatemala to, “Support efforts to increase revenues and reduce opportunities for corruption in tax and customs administration.”

The emphasis on the fair collection and spending of public revenues is crucial to strengthening the rule-of-law and reducing the violence that has driven tens of thousands of children from the Northern Triangle. Given the myriad socioeconomic challenges facing the region and the resources needed to address them, the growing focus of US foreign assistance on strengthening tax systems is timely and encouraging.

The Sustainable Development Goals After One Year – Already In Need Of Course Correction

by Michael Klosson, Vice President for Policy and Humanitarian Response, Save the Children

This post originally appeared on The Huffington Post 

In the weeks leading up to last year’s United Nations General Assembly, world leaders and activists were united in their optimism about launching a new set of global goals that would set a bold direction to 2030. One year on how are we doing? In short, not well enough. These inspirational goals require us all to stretch, but far too many are hunkered down in business as usual.

While celebrating the successes of the Millennium Development Goals (MDGs), we knew that we could do better. MDG achievements were impressive, but generally limited to those groups who were easier to reach. MDG progress was based in averages and masked inequalities. Less privileged groups did not see the same improvements, excluded from progress by their gender, ethnicity, caste, and place of birth, among other factors. Countries in conflict also saw few improvements. According to the World Bank in 2011, “No low-income fragile or conflict-affected country has yet achieved a single MDG.”

Recognizing the need for bolder action, the UN orchestrated one of the most participatory projects in its history to define 17 ambitious Sustainable Development Goals (SDGs) designed to move everyone, both in developing and developed countries alike, toward a better future by 2030. Embedded in this new framework was the transformational commitment that “no one would be left behind.”

One year on, overall progress toward the 17 goals in support of reaching everyone is already off track. Research from the Overseas Development Institute suggests that only three of the goals, including ending extreme poverty, are on a path to success with some additional effort, while nine goals, including many affecting children such as reducing maternal mortality, ending hunger, ending child marriage and boosting secondary school completion, are progressing much too slowly and require a major step change. Five goals, including reducing income inequality, are moving in the wrong direction. The Inter-Agency and Expert Group on SDG Indicators has yet to approve a set of global indicators to measure progress on the SDGs, and the promise to disaggregate data by gender, age and ethnic group – so critical to the goals’ transformational impact — does not appear very high on countries’ priority lists.

After their strong launch a year ago, world leaders have missed opportunities to throw SDG implementation into high gear. The World Humanitarian Summit, the High Level Political Forum (HLPF), the Financing for Development Forum, and the recent G20 Summit were big opportunities for pushing the SDG agenda forward, yet failed so far to trigger concrete action accelerating progress. As one UN representative said during the HLPF in July, “Leave no one behind isn’t something that will happen by everyone just repeating that phrase again and again at the UN.” The SDGs need to be taken more seriously if the world is to be successful in delivering on these goals.

While most countries have been slow to begin implementing the goals, there is good news: some have confronted the challenge and begun to design plans for achieving success. Twenty-two countries agreed to participate in national reviews at the High Level Political Forum in July. Colombia and Sierra Leone are examples of countries that have already worked to orient national institutions toward meeting the SDG goals. In addition, both countries have made monitoring and improving data a priority. These examples underscore the fact that with political will and determined effort, progress is achievable.

Meanwhile, Germany has worked to position itself as a leader in the process of achieving the SDGs. Not only did the German government note its need to address goals that were relevant to the country’s highly developed context, but it has also taken steps to address the goals in its distribution of international aid and by wielding its influence in the European Union.

In recognition of the fact that inclusivity is at the heart of the SDGs and indispensable to achieving them, such as ending preventable child deaths or ensuring all children learn, Save the Children launched in April the Every Last Child Campaign. This campaign shines a spotlight on groups of children excluded from progress to date because of who they are or where they were born. In every country where we are present, Save the Children is working to galvanize the necessary political will, resources and innovative programs and policies that will accelerate progress and bring “leave no one behind” to life. Our campaign recognizes that the SDGs will not be achieved without ending both poverty, but also discrimination against excluded groups of children. We set out three categories of initiatives – fair finance, equal treatment and accountability – which could turbocharge SDG implementation by overcoming barriers of exclusion.

The SDGs could be transformational but with 14 years still to go, they have yet to generate sufficient urgency. There are opportunities on the horizon to bring forward the magnitude of those goals so leaders feel the weight of their responsibilities to act now to fulfill them. We see the September 19 high level meeting at the United Nations on refugees and migration and President Obama’s September 20 summit on refugees as two such moments to tackle an unprecedented crisis of forcible displacement involving 65 million people, half of whom are children. This crisis has to be resolved if SDG implementation is to get on track. We have called on leaders to commit to provide access to quality education for all 3.6 million refugee children out of school in the near future, in keeping with the SDGs. Making these calls are in the context of defining and agreeing to national interim “stepping stone” targets, such as child survival or learning, will generate urgency by showing the trajectory required in 2020 that is necessary to reach the 2030 goal.

As new leaders take office in coming months in the U.S., at the UN, and in other countries, we will work to promote increased political attention to SDG implementation, improved data and accountability, institutional changes, and a priority focus on excluded groups. The ambitious commitment “to leave no one behind” cannot wait.

 

International Development and Humanitarian Aid: A Rare Point of Agreement Between Republicans and Democrats

Refugees in a child-safe space in Greece, run by Save the Children
Refugees in a child-safe space in Greece, run by Save the Children

For the past two weeks, Americans have watched the Republican and Democratic National Conventions with excitement and anticipation as party leaders presented starkly different visions of what the country’s next four years could look like.

The parties also adopted their official platforms, laying out their policy positions – both domestic and foreign. Save the Children has been engaged at the gatherings in both Cleveland and Philadelphia to advocate for policies in the United States and abroad that protect children and help them survive and thrive. As a child-centered development organization active in 120 countries, we are particularly interested in the two parties’ positions on international humanitarian and development assistance.

Happily – and in contrast to wide divides on other issues – the platforms indicate that both Democrats and Republicans view international development and humanitarian assistance as integral to U.S. security and as embodying U.S. ideals. According to the Republican Platform, foreign aid, “Advanc[es] America’s security and economic interests by preventing conflict, building stability.” The Democratic Platform uses similar language, stating that development assistance can, “Prevent threats, enhance stability, and reduce the need for military force.”

But there are differences between the two platforms. While both focus on making aid more effective, the Republican position on international assistance emphasizes encouraging increased private sector involvement to drive economic growth, promote country ownership, and sustainably combat poverty. For its part, the Democratic Platform emphasizes further incorporating local organizations, marginalized populations, and women in development to promote country ownership.

Due in part to recent sustained, bipartisan support for international development, extreme poverty has been halved in the past 25 years, with 50 million more children in school and 14,000 more children surviving each day. This past Congress provides examples of bipartisan cooperation on development assistance including:

But there is more work to be done. Save the Children continues to advocate to sustain efforts to help the world’s most vulnerable children, both in the United States and abroad. A key part of this effort is Save the Children’s Every Last Child campaign launched this year to reach children marginalized due to their gender, disability, geographic isolation, ethnicity, or their status as refugees or immigrants.

Many children have been left out of global progress due to a combination of poverty and discrimination, whether it be intentional or unintentional. To reach these children, the Every Last Child campaign focuses on three pillars:

  • Fair financing
  • Equitable treatment, and
  • Accountability

 The winner of the election will have a profound impact on shaping how America engages with the world. Save the Children believes that with an inclusive approach to international development assistance and a continued investment in responding to humanitarian crises, we could be generation that ends extreme poverty and preventable child and maternal deaths. The opportunity is there to be seized.

In order to reach the Every Last Child campaign’s goal of inclusion, more needs to be done by both sides of the aisle – and recent history proves it’s possible. Regardless of who sits in the White House, Save the Children will be knocking on their door to ensure that every last child, no matter where they live, has the chance to survive and thrive.

LindseyMattila

This post was written by Lindsey Mattila and Sarah Hogoboom.  Lindsey is a Global Health and Food Security Policy Intern working with the Public Policy and Advocacy Department this summer. She is from Portland, Oregon and will be a senior this fall at Claremont McKenna College where she is studying Government. Sarah Hogoboom is the Summer Global Development and Advocacy Intern with our Public Policy and Advocacy Department. A rising senior at Hamilton College, Sarah studies World Politics and works at the Arthur Levitt Public Affairs Center on campus.