I. General Principles (1-2)

1.1  Ensure that their economic policies are compatible with human rights.

1.2. Ensure that fiscal policy serves to realize human rights, whether civil, political, economic, social, or cultural rights. To achieve this, States must ensure that fiscal policy provides sufficient funding of key policies to guarantee rights; redistribute revenue and wealth to achieve substantive equality; build a framework of fiscal instruments enabling the protection and promotion of rights; and strengthen the democratic governance of public resources by applying criteria of transparency, participation, and accountability.

1.3. Ensure they act according to their human rights obligations when they pursue other legitimate aims with their fiscal policy, such as economic growth and macroeconomic stability.

1.4. Ensure that all the agencies involved in fiscal policy are guided by human rights obligations in their respective mandates, and act in an integrated and coherent way to guarantee them.

1.5. Interpret the different legal frameworks applicable to fiscal policy in accordance with human rights obligations, giving priority to those obligations over others.

Guidelines

According to this principle States should:

1. Adopt an institutional framework focused on guaranteeing rights. 

Establish an institutional framework for designing fiscal policy which has the guarantee of rights as one of its main aims. This requires making fiscal decisions based on relevant information such as mobilizing, allocating, and executing resources to guarantee rights using, among other things, mechanisms such as:

• Assessments of the distributive impact of the tax system, particularly on specific populations, such as Indigenous and Afro-descendant communities, and women, by analyzing the different types of taxes and other government revenue. These assessments must be regular, open to public scrutiny, and based on comparative methodologies.
• Budgetary systems with outcomes based on indicators of effective rights enjoyment, which are sufficiently detailed to respond to the needs of specific populations.
• Independent analysis of debt sustainability and its effects on capacity to fulfill human rights obligations.
• Regular estimates of the resources required to address unresolved human rights issues that will inform macro-fiscal and budgetary planning.
• Ex ante human rights assessments of the consequences of privatizing public companies.
• Regular assessments of revenue generation efficiency to ensure that policies are mobilizing the maximum of potential resources, including through control of tax avoidance and evasion, recovering tax debts, and reviews of fiscal amnesties.

2. Guarantee coherence and cooperation between institutions and policies. 

Ensure that state institutions are coordinated and cooperate so that fiscal policy prioritizes the realization of rights. This requires, among other things:

• Guaranteeing sufficient and adequate spaces to discuss and adopt fiscal solutions to unresolved human rights problems.
• Information systems with a human rights focus at the national and subnational levels.
• Strengthening the technical and decision-making capacity of other ministries in their communication with the treasury and the ministry of public finance.
• Ensuring the coherence of fiscal policy with monetary, currency exchange, financial, and other policies, so that the interaction among them is consistent with human rights obligations.

3. Deepen fiscal democracy. 

Ensure that decision-making processes in fiscal matters are based on the broadest national dialogue possible, with significant civil society participation. This requires at the least:

• Ensuring that fiscal policy is subject to the population’s scrutiny during the stages of design, implementation and assessment.
• Encouraging independent civil society and academic organizations to develop fiscal policy alternatives and assess their social impacts, as well creating spaces for dialogue with institutions in this field.
• Stimulating academic research and the diffusion of data focusing on the distributive and social impacts of fiscal policy.
• Providing civil society with information and data so they can make their own assessments of fiscal policy.

4. Advance fiscal pacts. 

Advance the formation of long-term fiscal pacts aimed at realizing rights, and thus encourage a higher level of voluntary tax compliance. These pacts should be based on reciprocal relations between the State, citizens, and businesses, in accordance with the constitutional commitments of each State, including agreements relating to the:

• management of public finances, taking into consideration criteria that are counter-cyclical, redistributive, rights-guaranteeing, and environmentally sustainable;
• achievement of more progressive tax reforms, particularly in relation to income and assets; levies on natural resources as part of ecological transition policies to reduce their possibly regressive effects; and taxes on financial transfers, wealth, and capital gains;
• assessment of the quality and transparency of public expenditure; and
• governance of tax policy in particular, fiscal policy in general, and of financial policy at different levels of government.

States must:

2.1 Design, implement and assess fiscal policy in accordance with their obligations to respect, protect and fulfill human rights. Although human rights obligations do not establish specific fiscal policies, they limit the discretion of States in all the instruments and stages of fiscal policy.

2.2 Refrain from interfering with the enjoyment of rights, by discriminating against certain groups, withdrawing or diverting funds from existing programs, or assigning funds to policies that negatively affect rights. States must abstain from implementing fiscal policies that negatively affect the right to equal political participation and democratic representation (“obligation to respect”).

2.3. Safeguard against the actions of third parties who hinder or compromise the task of mobilizing resources, assigning budgets, and incurring expenditures to guarantee rights. They must limit the role of these third parties, establish reporting mechanisms, intervene systematically when they commit infringements, and ultimately sanction them. They must refrain from granting any form of support or incentive to those who fail to comply with their human rights responsibilities or who commit acts of corruption (“obligation to protect”).

2.4. Adopt the necessary tax measures to ensure the full realization of rights as expeditiously as possible, with no discrimination whatsoever and with the aim of promoting substantive equality (“obligation to fulfill”). This includes the obligation to finance the provision of goods and services essential for guaranteeing rights in sufficient quantity; in a manner which is accessible from the financial and geographical point of view; acceptable in the sense of responding to cultural, socioeconomic, and other types of difference; and ensure these goods and services are of acceptable quality.

Guidelines

In accordance with this principle States should:

1. Adopt a legal framework.
Adopt a legal, regulatory, and administrative framework for the management of public finances based on human rights obligations, that is clear, transparent and governed by comprehensive and understandable laws, regulations, and procedures.

2. Employ a rights-affirming approach.
Base their fiscal policy on a rights-affirming approach and incorporate a comprehensive perspective by coordinating the range of programs and policies of all sectors and levels of government with human rights imperatives.

In order for the budget to be drawn up and assessed through a human rights lens, States should:

• allocate funds using program budgeting systems;
• follow internationally agreed budget classification systems;
• review their administrative procedures for drafting statements prior to the approval of the budget and budgetary proposals, guaranteeing they adhere to human rights obligations;
• review their classification systems to ensure budget allocations and codes are included that, at the very least, break down the budgetary information according to population and territorial criteria, among others. 

3. Establish regulations and sanctions for non-State actors. Require that corporations and other contributors exercise due diligence in identifying, preventing, and mitigating the risks of human rights violations arising from their tax practices.

• Require financial institutions to report their role in facilitating tax evasion and avoidance, and enable specialized agencies to supervise them rigorously; require licenses or registration which can be withdrawn in cases of non-compliance, and subject these institutions to effective monitoring systems.
• Endow supervisory agencies with appropriate powers, including the authorization to carry out inspections, demand the presentation of information by financial institutions, and impose sanctions. The regulatory and supervisory regime of banks should include requirements regarding client identification, the establishment of registers and reporting of suspicious transactions, both internally and externally.

4. Safeguard against State capture. States must protect themselves from third parties who hinder the task of mobilizing resources, by preventing the undue influence of private interests in decision making on taxation and fiscal matters. This may involve a review of regulations on the lobbying and funding of political campaigns. 

5. Enhance resource generation. Enhance the progressiveness of the tax burden and the counter-cyclical nature of fiscal policy, and carry out tax reforms aimed at improving the level of tax collection to ensure macroeconomic stability, enable financing of public spending, in particular social spending, and improve income distribution.

6. Prioritize resource allocation. Prioritize allocation of resources for the realization of human rights over other possible priorities, with special emphasis on the protection of disadvantaged populations, and increasing the allocation of resources to neglected rights.

7. Ensure resource execution. Ensure that resources are executed in a timely, effective, transparent and efficient manner, according to the approved budget. Ensure the availability, accessibility, adaptability and acceptability of the goods and services necessary for guaranteeing rights.

8. Advance local and subnational government. Ensure that decentralization is favourable to the realization of human rights and is accompanied by strategies for generating and transferring resources, technical capacities, and the required instruments.