Friday, 15 March 2013

Truth about taxes

Many of us have bought and eaten Silver Spoon sugar, Kingsmill bread, Ryvita and bought and drank Twinings tea. What many may not be aware of is that they are all products of Associated British Foods, a huge business that operates in dozens of countries around the world, owns Primark, has a turnover of £11 billion - and avoids paying tax to the tune of millions every year in Zambia, one of the worlds poorest countries. See the Action Aid campaign on this issue here.

Why does this matter? Because Zambia Sugar, a subsidiary of Associated British Foods, made record profits between 2008 and 2010 but paid no corporation tax at all. Between 2007 and 2012 it paid corporation tax at a mere 0.5% of its profits when Zambia's corporation tax is 35%.  And they have done this legally, though not morally. Meanwhile low paid Zambian seasonal sugar cane cutters pay tax at 25% on all earnings above the personal tax threshold. Zambian market stall holders selling stuff - including bags of sugar - pay business tax to the council every day whether they have earned anything that day or not. Its not fair. Action Aid estimate that the cane cutters pay tax at 20 times the rate of Associated British Food subsidiary Zambia Sugar and the market stall holders pay tax at 90 times the rate.

Paying taxes is essential. Key services such as health and education cannot be provided on an adequate, ongoing and widespread basis otherwise. Primary education is not free in Zambia. The health system in Zambia features large queues and a shortage of medicines. There were eight million people in Zambia living in absolute poverty in 2010, two million higher than in 1991, meaning that even basic food, water, lacking (see here).

Avoiding paying tax should be made very hard. Companies should see paying taxes at a decent rate as the responsible thing to do. Governments need to: ensure that their tax regimes are in order; close tax loopholes; and work for and agree to international treaties clamping down on tax avoidance. This is essential to allowing countries and people to meet their needs and have decent opportunities in their lives. This would surely be welcomed by all those involved in Comic Relief, working for a just world free from poverty.

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