Campaigns

6 reasons why tax dodging matters for people living in poverty

Murray Worthy's picture
Murray Worthy Tax Justice Campaign Manager

Tax can often seem complicated and not directly relevant to our lives, or to the lives of people who live every day in poverty. But it is. Tackling tax dodging offers a path out of poverty for billions of people.

So, why do we care so much about tax dodging?

Frackson Phiri, Deputy Head of Isoko Primary School in Zambia. The school doesn't get enough money from the government to pay for desks for the pupils.
Frackson Phiri, Deputy Head of Isoko Primary School in Zambia. The school doesn't get enough money from the government to pay for desks for the pupils.
Photo: ActionAid

1. Poor countries lose a lot of money to tax dodging

Every year the world’s poorer countries lose an estimated $160 billion to corporate tax dodging. Yes. That's right. $160 billion. 

To put that in context, that means that they are losing more money to corporate tax dodging than they receive in all international aid from all rich countries put together. That’s a lot of money.

2. That tax should be paying for public services that help reduce poverty, like education

Across the world’s poorer countries, governments don’t have enough money to pay for basic public services that are crucial to tackling poverty, like ensuring every child has a good education.

Last year, I met Ivor Mwena, Head Teacher of Isoko Primary School in northern Zambia, who told me what tax meant to him:

“Our school building was too small to accommodate all our students, which means we were only able to offer two hours of teaching to each class a day. With ActionAid’s support the local community constructed a new school building themselves.

 Ivor Mwena, Head Teacher of Isoko Primary School, northern Zambia

"With the extra classrooms, each student will now get twice as much teaching time. However, we still can’t afford desks for the new classrooms, meaning the students have to sit on the concrete floor.

“If the government had more tax revenue they could fund constructing classrooms to house more pupils and pay for the desks in the new building.”

3. It's simply not fair for big companies not to pay tax

Marta works in a small beer and food stall in Ghana, working over 12 hours a day every day to make just over £200 a month in income. 

Next door to her stall is the Accra Brewery, owned by SABMiller which make beers like Grolsch and Peroni, which produces nearly £30 million of beer a year.

Marta, a small shop owner in Ghana, pays more tax than the giant brewery next door

Astonishingly, because the multinational company uses tax havens and complicated accounting to cut its tax bills, Marta pays more tax than the giant brewery next door.

Marta sums it up pretty well: “Wow. I don’t believe it.”

4. Tax is sustainable and supports democracy

It’s not just about the amount of money, as my colleague Kryticous, who works on tax for ActionAid Zambia, explains:

Kryticous Nshindano, Economic Justice Manager, ActionAid Zambia

“Ultimately, tax is the only way we’re going to eradicate poverty. Tax is the most sustainable source of finance for public spending and it gives you freedom in how you target spending on development, so you can achieve what you want to achieve as a nation.”

5. The UK’s tax system is responsible for a lot of these problems

The UK’s tax system has a big impact on how much tax is paid by UK-run multinational companies when they operate in poorer countries.

We’ve estimated that tax dodging by UK multinationals could be costing poorer countries as much as £3 billion every year. That’s enough money to give half the children in the world who currently don’t go to primary school an education.

6. We can do something about it!

The good news is that it doesn’t have to be this way. Ahead of the election in May we have a real opportunity to influence the priorities of the future government, to make sure that UK companies pay their fair share of tax in some of the world's poorest countries.

We are calling on all political parties to pledge to introduce a Tax Dodging Bill which would raise billions to tackle poverty in developing countries, as well as raising billions to tackle poverty in our society. But we need your help to make it happen.

 

 

Why it’s been a huge week for our tax campaign

Murray Worthy's picture
Murray Worthy Tax Justice Campaign Manager

It’s been a busy few weeks since we launched the campaign for a Tax Dodging Bill, and it seems like tax has never been a bigger political issue. Thanks to the pressure from campaigners and some huge scandals, politicians are already pledging to act – but there’s still a long way to go before all the parties support a Tax Dodging Bill to make tax fair.

Photos of newspaper stories about tax dodging
Tax has been hitting the headlines across the newspapers
Photo: ActionAid

HSBC's tax scandal

If you’ve seen the news recently you’d be hard pressed to have missed the scandal over HSBC’s Swiss division helping rich clients dodge tax. While the political wrangling over who knew what, when continues, the revelation that one of the world’s largest banks helped clients dodge tax all over the world - including in many of the world's poorest countries – has catapulted tax back to the top of the agenda.

In the UK, one big question has been around the fact that only one of the 6,800 people with UK-linked accounts had been prosecuted, leading some to question whether the cuts to the UK’s tax authorities staff and resources are to blame. Stopping future cuts to HM Revenue and Customs’ budget is just one part of what our Tax Dodging Bill would do to bring in billions of pounds to fight poverty in the UK and the world’s poorer countries.

Thousands of you are demanding change

The Tax Dodging Bill campaign has also been piling up the pressure on politicians. Already over 40,000 people have signed the petition and thousands of people have emailed their local election candidates. Politicians are already feeling the heat – some candidates have said they have had more people contact them about tax dodging than any other issue.

ActionAid has also released our estimate for what a Tax Dodging Bill could do for people in the world’s poorer countries. According to our assessment, a well-crafted Tax Dodging Bill could curb tax dodging by UK companies, which is currently costing poorer countries £3 billion a year. To put that in context, that’s enough to pay for half the children in the world who currently don’t go to primary school to get an education.

Politicians promise action on tax dodging

Between the scandals in the media and the pressure from campaigners, the political parties are all now keen to be seen to be getting tough on tax dodgers. After the Conservatives and Liberal Democrats set out how many billions they aim to recover from tackling tax dodging, Labour announced last week that they would make tackling tax dodging a major priority for their first budget. While they didn’t commit to everything we are calling for in the Tax Dodging Bill, this is a big step forwards from the main parties of Westminster.

Meanwhile the Green Party and the SDLP have given their full support to a Tax Dodging Bill, and MPs from across the political spectrum spoke out in a parliamentary debate on the need for more action to tackle tax dodging.

The election is on the horizon; we need your help

The political momentum is growing, and we’ve come a long way in the short few weeks since the campaign launched, but we still need to go much further if we are to make tax fair, and recover billions of pounds to fight poverty.

We need to keep the pressure up and tell politicians of all parties that they need to do more to tackle tax dodging, and that they need to back the Tax Dodging Bill before the general election in May.

 

We’ve got 100 days to make tax fair. But we need you

Murray Worthy's picture
Murray Worthy Tax Justice Campaign Manager

In 100 days from today, people across the UK will be going to the polls to vote in the next general election. Between now and the election we have a real opportunity to shape the priorities of whatever party or parties get into the next government.

Tax Dodging Bill campaigners outside the Houses of Parliament
Tax Dodging Bill campaigners outside the Houses of Parliament
Photo: Patrick Williamson

Since we last went to the polls lots has changed in the world, we’ve seen the popular uprisings of the Arab Spring, discovered that our governments are reading all our emails, had our lives forever enriched by the invention of the selfie stick, and tax dodging has gone from a technical issue to the front pages of every newspaper. The real scandal of these exposés of companies like Amazon, Google or Starbucks isn’t just that these companies are getting away without paying their fair share; it’s that they also deprive the government of billions that could be used to tackle poverty.

Tackle tax dodging, fight poverty

Tax dodging by these household names is just the tip of the iceberg. Every year the world’s poorer countries lose an estimated $160 billion to corporate tax dodging, more than all rich countries together provide in overseas aid. This is money that should be funding vital public services like education and healthcare.

Globally, 1 billion children live in poverty and in poorer countries 57 million children are still out of primary school. The good news is that it doesn’t have to be this way. While so many governments’ budgets are already stretched, cracking down on corporate tax dodging can ensure there is money available to right these wrongs.

Politicians have the power to change the UK’s tax rules to make sure that companies here pay their fair share of tax when they do business here. Not only that, the UK’s tax rules can also help ensure UK companies pay their fair share of tax wherever else they operate - which includes some of the world's poorest countries.

That’s why in the run up to this election we have teamed up with a coalition of major charities and campaigning organisations including Oxfam, Christian Aid and the NUS to demand the next government takes real action to tackle tax dodging.

The Tax Dodging Bill - to make tax fair

We are calling on all political parties to pledge to introduce a Tax Dodging Bill within 100 days of the election, that would tackle tax dodging in poorer countries and the UK, to raise money to fight poverty. We’re calling for a law that will:

  • Make it harder for big companies to dodge UK taxes and ensure they’re not getting unfair tax breaks
  • Make sure UK tax rules don’t encourage big companies to avoid tax in developing countries
  • Make the UK tax regime more transparent and tougher on tax dodging

We estimate that the Tax Dodging Bill could raise billions to tackle poverty here in the UK and could also help raise billions in developing countries, which could be spent on schools, hospitals and other essential services for people living in poverty.

We can win this – but we need your help. Join us. Together, we’ll make tax fair.

A world apart: Davos elites and working women

Kasia Staszewska's picture
Kasia Staszewska Women’s Rights Policy Adviser

As the World Economic Forum Annual Meeting draws to a close in Davos, ActionAid reveals the shocking cost of gender inequality in work.

ActionAid-trained women garment workers in Savar, marching to demand their rights under Bangladesh labour laws
ActionAid-trained women garment workers in Savar, marching to demand their rights under Bangladesh labour laws
Photo: Nicola Bailey/ActionAid

This morning the sun shone bright and cold on the Annual Meeting of the World Economic Forum in Davos, Switzerland. Captains of industry and heads of state rose from their five-star-hotel beds to make their way through the formidable security perimeter into the conference.

Whether they woke up focused on tackling the problems of the global economy or worried that they wouldn’t get time to pop into the Google party, their lives are a universe away from the billions of poor women and men who helped create their wealth and whose votes gave them the power to govern.

Here at ActionAid, we believe that the people in power need to sit up and take notice of the fact that women’s cheap and unpaid labour is subsidising the global economy to the tune of trillions. Our new briefing paper: Close the gap! shows that women in poor countries could be a staggering US$9 trillion better off if their pay and access to paid work were equal to that of men.

Times are a-changing

This year’s Outlook on the Global Agenda Report cites income inequality and unemployment growth as the most pressing of the top 10 trends for 2015. Given rising public concern, perhaps it’s not so surprising to see this year's Forum reflect this with its focus on income inequality.

But here at ActionAid, we think it’s time to broaden the conversation and take up the crucial issue of economic inequality for women.

Women’s work in numbers

While both women and men in developing countries face a struggle for daily survival, women are almost always at the bottom, in the lowest paid and valued jobs. Women make up 60% of the world’s working poor, but on average they are paid between 10% to 30% less than men (pdf), for the same work (if they're paid at all).

More than half of all employed women worldwide are in informal vulnerable employment (pdf) and in Sub-Saharan Africa and South Asia more than 80% of the jobs women take are completely unregulated and insecure.

Exploited and invisible at work

The kind of conditions that women endure at work, including in the value chains of international corporations, are all too often similar to those that led to the Rana Plaza disaster in 2013.

And away from paid work things are scarcely any better. Women are spending up to ten times more than men (pdf) looking after their homes and families – from fetching water and fuel to caring for the sick, the elderly and the young – which effectively means that they are subsidising the economy with free and often invisible work.

Everyone must play a part to improve women’s working lives

Women’s work - in and outside the home - is vital to sustainable development and for the wellbeing of societies. Without the subsidy it provides, the world economy would not function.

Yet despite the international development community showing growing interest in women’s economic empowerment, we believe the strategies tried so far are not up to the challenge, and they show limited results

We need to address the underlying causes of this ongoing crisis. Businesses, governments and international institutions must all play their part. We've been keeping a watching brief on Davos this week - follow #closegendergap on Twitter for updates.

And get all the facts, stats, opinions and research you can trust in our report:

 

Read more on women and pay:

It always amazes me to see the difference ordinary people can make when we take action together. Even when the issues seem huge, by standing together with campaigners around the world we’ve managed to hold one of the biggest banks to account, pushed for immediate action when the crisis broke out in Gaza, and we’ve got over 33 councils on board with our Towns Against Tax Dodging campaign. Go people power! Have a look at what you’ve helped make happen this year.

Thank you from ActionAid
A huge thank you from all of us at ActionAid UK
Photo: ActionAid

Clean Up Barclays

Campaigners hand in 50,000 actions and over 1,000 personal messages to BarclaysThe year kicked off with a bang in January as we continued the Clean Up Barclays campaign where we made the bank stop promoting the use of tax havens to its clients operating in Africa. Thousands of us wrote to Barclays boss Antony Jenkins and in February activists in Zambia and Denmark added their voices to the campaign. Campaigners from across the world covered Barclays’ Facebook and Twitter accounts with messages telling it to behave.

In March thousands of us contacted our MPs to ask them to raise the issue in Parliament and in April we took the Barclays AGM by storm, with a giant billboard funded by you, handwritten messages and a twitter action. Campaign volunteer Will attended the AGM and asked the bank to end their promotion of tax havens in front of thousands of people, securing a promise from Barclays boss Antony Jenkins to find common ground with us.

In May we waited for Barclays to act on its commitment. We kept up the pressure by delivering over 53,000 petition signatures to Barclays headquarters and in November we were delighted that Barclays agreed to our demand to stop promoting the use of tax havens in Africa! Whilst it wasn’t a total victory, it’s pretty amazing that pressure from ordinary people like us can influence the position of one of the world’s biggest banks.

Vedanta

Zambia Alternative Mining IndabaIn June allegations emerged of tax dodging by KCM, a Zambian mining company owned by UK mining giant Vedanta. Campaigners in Zambia took to the streets demanding that the company comes clean and, in support, over 6,000 of us in the UK sent an email to Vedanta Chairman Anil Agarwal. Following our campaigning in Zambia and the UK, blogs and media attention, the Zambian government committing to a review of the mine, and we secured a meeting with the company.

Gaza and Israel

In July this year conflict again broke out in Gaza and Israel which cost thousands of people their lives and even more people their homes. In response, over 11,000 of us contacted the Foreign Secretary asking for him to push for an immediate and lasting solution to the violence. And thanks to the strength of public outcry, we saw UK politicians strengthening their response to the crisis. Thanks to the generosity of ActionAid supporters, we were also able to distribute vouchers for essential supplies like food, blankets and clothes to people affected in Gaza.

Towns Against Tax Dodging

In August and September you helped us take the campaign for tax justice to your local communities across the UK, to develop a groundswell of support ahead of next year’s general election. Over 10,000 of us have emailed our local Councillors to ask them to pass a motion in support of the Towns Against Tax Dodging campaign and over 33 councils are already on board! Local events were held across the country in October and November, hosted by our wonderful Local Organisers. We were overwhelmed with the level of interest and passion from local activists. In November and December you’ve been ensuring that the campaign hits the headlines by contacting local papers, securing newspaper coverage from Devon to Fife as well as getting almost 100 local businesses on-board.

Local Organisers supporting the Towns Against Tax Dodging campaign

Next Year

Next year is an exciting year for international development and our campaigning. We’ll be launching a  new campaign ahead of the general election to make sure that politicians get tough on tax dodgers. It’s a great opportunity to make our voices heard and demand that big companies operating in poor countries pay their fair share of tax. We’ll also be campaigning on women’s rights, climate change and more. But we’re going to need your help to make it happen. I can’t wait to see what more we’ll achieve together in 2015! But until then I hope you have a great break and a happy new year!

The Campaigns Team, ActionAid UK

P.S. Throughout the year we have been running hugely popular tax justice walking tours of Mayfair – you can book your ticket for January now

All I want for Christmas

Claire Donner's picture
Claire Donner Digital Campaigner

Thanks to your support 2014 has been pretty fantastic. But our work is far from done and we’re all really excited about what’s on the cards for 2015. So we put together this Christmas wish list with just a flavour of what we’ve got planned.

1. For the next government to put tackling tax dodging at the top of their agenda

Whichever political party gets into government after May’s general election needs to make sure they prioritise tackling tax dodging by big businesses in poor countries. Over four in five of us believe tax dodging is unfair, and every year governments around the world are losing out on billions of pounds of tax that could be going to provide basic services like roads, schools and hospitals to fight poverty.

Also if the next government stopped companies dodging tax, by next Christmas we might be able to worry a bit less about whether or not we’re buying our presents from tax dodgers!

2. A fair deal for developing countries on climate change

Richer countries caused most of the problem, but it’s the world's poorest people that are bearing the brunt of climate change. With the global climate change negotiations gearing up for a big meeting in Paris in December 2015, we need to push politicians for a fair deal that sees carbon emissions drastically reduced and that ensures there’s support for developing countries.

3. To make the world a safer place for women

Women and girls around the world face widespread violence, sexual harassment and abuse in their homes, workplaces, on the streets and on public transport.

The new ActionAid UK Women’s Rights campaign will launch in 2015 where we’ll stand together to empower women all over the world to break the cycle of poverty and violence.

4. For the global movement to keep growing

We’re part of a powerful and growing community of activists and campaigners across the world fighting to end poverty and its causes. Next year, we hope to see our movement go from strength to strength. And we’re so glad that you’re a part of it!

5. You!

We couldn’t do any of this without our fantastic supporters! Whether you’re signing a petition, writing to a CEO, meeting your MP, donating money, or writing to the local press, it’s your support that can help make all of this possible.

As well as all of the amazing things you do at home and in your communities, we love meeting you face-to-face so we can provide support and share ideas. In January and February next year we’ll be holding a number of events across the UK, providing training on how to campaign to get companies to pay their fair share of taxes across the world! Make our wish come true? Grab your free space!

So whatever you’re celebrating this festive season, from everyone here on the ActionAid UK Campaigns Team, have a great time and we’ll be in touch in the new year with great ways to get involved!

What do you want to see in 2015? Add your ideas in the comments below.