A Legal Analysis of the Mutual Interactions between the UN Sustainable Development Goals (SDGs) & Taxation

Chapter 4

Research Highlight 2020

What is the role of tax in achieving the Sustainable Development Goals?

Major international organisations, including the International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), the United Nations (UN) and the World Bank Group (WBG) have recognized the role that taxation could play in achieving the UN Sustainable Development Goals (SDGs) as part of the UN 2030 Agenda, in particular in terms of domestic revenue mobilization. However, it is not entirely clear whether and how taxation can (or should) contribute to the achievement of these goals. 

Building upon the work of the UN and other international organisations, this paper shows that three types of interactions can arise between taxation and the SDGs. First, taxation can indirectly support the achievement of the SDGs by providing revenue to fund supporting activities. Second, tax measures can directly and positively interact with the UN 2030 Agenda by encouraging certain behaviours that are in line with the SDGs. Third, tax measures can have a direct and negative effect on the SDGs when they incentivise behaviours that undermine the achievement of the UN Agenda. This paper discusses each of these interactions by means of examples. It provides a broad picture as to the overall impact of tax policy on the 17 SDGs.

Based on the observation that the SDGs are supposed to be integrated in all policy areas, including taxation, the paper then explores whether policy makers could be legally obliged to align tax systems to the SDGs, eliminating potential negative interactions while reinforcing positive ones. Although the UN 2030 Agenda is not binding, the paper concludes that the SDGs can inform decision-making in the field of taxation, encouraging policy makers to reform their tax system and having some legal effects on the judicial process.