Anti-corruption for the many, not for the few (AC4ALL)

For decades, Mexico has struggled to tackle inequality. National and global inequality indicators remain stagnant, especially in a challenging economic context. Mexico is living in a paradox: the country's economy has developed to be the 15th largest in the world, while 53% of the population is living in poverty.

Inequality does not only translate to income or wealth differences (the richest 10% of the population has concentrated almost 80% of the country's wealth). Inequality also impacts access to power and opportunities, and even access to a better environment.

Better public intervention to address inequality is needed. But in Mexico, the government first needs to increase its public revenue. Mexico is the OECD country with a lower tax collection (14% vs the average of 33,85%). The subnational scenario is also not encouraging. States’ income depends on 80% of the federation transfers. If governments do not improve their fiscal capacity and policies, public resources can’t be used to benefit the most vulnerable.

Inequalities (of income, wealth and opportunities) are intrinsically linked to corruption. Mexico loses approximately 8.5% of GDP through corruption, hence resources are not available for social development to mitigate and reduce inequality. In Latin America and the Caribbean, the amount lost to illicit financial flows is roughly 14 times the amount of overseas development assistance (ODA) received by the region, according to ECLAC. Conservative estimates based on the work of Zucman et al. show that in the case of Mexico, the wealth held in tax havens is the equivalent of almost 10% of the country’s GDP. This potentially means that the levels of inequality in the country could be even greater than currently known.

Corruption also leads to an unequal distribution of power in society, which, in turn, translates into an unequal distribution of wealth and opportunities. This affects how reforms and public interventions are designed and implemented, as well as how public resources are allocated. Corruption and inefficiency also have a direct impact on citizens' overall trust in the tax collection and public spending. In Mexico, 70% of the interviewees consider that it is justifiable not to pay taxes because the government is corrupt.

The anti-corruption agenda can bring another approach to address inequality. As a federal country, Mexico needs to strengthen the fiscal policy and capacities of the three levels of government (federal, state, and municipal) to address inequality in the country. To contribute to this agenda, AC4ALL acknowledges the wide corpus of knowledge, research, opinions, and press coverage on addressing inequality with the potential to connect with policymakers and public opinion to bring change. But there is still the need to overcome the “political will dilemma” that has thwarted its implementation.

Making things happen requires a combination of technical capacity with social engagement, as past anti-corruption policy reforms have proven. Therefore, AC4ALL proposes a three-pillar strategy:

1. Knowledge fusion that leads to having the ready-to-install tools available for interventions and reforms at the federal, state, and municipal levels to strengthen the fiscal policy and capacities needed to tackle inequality.
2. Identification and control of leakages and corruption that are affecting both public revenues and expenditures.
3. Include public opinion and participation in the design and implementation of tools that improve fiscal policies and interventions.

AC4ALL aims to promote better fiscal and budgetary policies through anti-corruption efforts for the many, not for the few. We will advocate for change and raise awareness on budget transparency and fiscal justice through evidence-based research, inclusive engagement, coalition building and capacity development.

The project AC4ALL recognizes that the success of tax reforms, initiatives and the reduction of inequalities not only in Mexico but in the Latin American region, has been hampered by four main issues related to:

• Insufficient mobilisation of public revenues and new sources of public finance;
• Leakages and corruption affecting public revenue and expenditures;

• Failures to allocate and spend public funds effectively considering the needs of marginalised and vulnerable groups; and,
• Public opinion is not considered in the design of progressive and inclusive fiscal reforms, policies, interventions, and initiatives.

To tackle these hurdles, we recognise the effectiveness of an effective public tactic from an anti-corruption approach. AC4LL will focus on:

• Sharing and broadcasting actionable knowledge. Through its knowledge fusion strategy, AC4ALL identifies, shares and broadcasts knowledge produced by civil society, academia, investigative reporting, public institutions and even the private sector that can be actionable to bring about change.
• Gaining political traction to improve fiscal policy. The project navigates a diverse set of interests, actors, and institutional inertias to gain political traction and social relevance to implement the necessary interventions that will improve revenue collection and expenditure.
• Fostering people´s participation. AC4ALL not only takes into consideration people's and communities' opinions but also their diverse set of interests when designing and implementing an intervention. It also considers actively engaging people to protect public resources.
• Developing public communication strategies focused on change. Communication can be a powerful tool for change, particularly when it's focused and purposeful. This is an essential element of the AC4ALL strategy. AC4ALL aims to communicate elements of the anti-corruption, transparency and accountability agenda as a means to reduce inequalities in Mexico that leads to concrete tools, actions and tangible results.