Campaign blog

Why we're calling for an end to the violence in Gaza

Richard Miller's picture Richard Miller ActionAid UK Executive Director

We’ve all been watching the news about what’s been happening in Gaza with growing dismay over the last few weeks. It’s easy to feel powerless in the face of this ongoing crisis, but we can make a difference by campaigning and calling for action.

Palestinians inspect destroyed houses in the Shejaia neighbourhood, which witnesses said was heavily hit by Israeli shelling and air strikes during an Israeli offensive, in Gaza City July 26, 2014.
Palestinians inspect destroyed houses in the Shejaia neighbourhood, which witnesses said was heavily hit by Israeli shelling and air strikes, in Gaza City July 26, 2014.
Photo: © Majdi Fathi/NurPhoto/Corbis

Since 2007, ActionAid has been working to support marginalised communities in the wider occupied Palestinian territory.

In this current escalation of violence ActionAid believes that the killing, destruction and displacement must end. Israel must stop all attacks on Palestinians. Armed groups in Gaza must stop launching rockets into Israel.

Everyday we are seeing the human cost of the violence that is unfolding. Grace Nicolas, a colleague from ActionAid Australia who recently visited the region wrote:

“The carnage in Gaza is destroying the lives of women like my friends, and their families. Hospitals are running on reserve fuel supplies and people are without access to clean drinking water. It is unthinkable that it is necessary to remind the world that they are people. Is it because we can’t hear the bombs from our homes?”

Not only is the current violence terrible, indiscriminate targeting of civilians is also illegal under international law.

International action can help. We know that the recent public outcry has been making a difference. We have to keep up the pressure.

Tags: Gaza

Breaking into politics: the real challenges for women

Daphne Jayasinghe's picture Daphne Jayasinghe Women’s Rights Policy Adviser

Following the cabinet reshuffle in the UK this week and the promotion of 10 women the UK media has been awash with stories of the ‘male, pale, stale’ backlash of disgruntled ousted male ministers and (depressingly) the fashion sense of newly appointed women ministers.

What was, as always, underreported was a meaningful analysis of the barriers to women’s political participation that prevent them from rising to political leadership positions.

Kusum Kumari Tharu, 30 attending a REFLECT meeting in Nepal. Kusum was a founding member of a local womens group, Sarashwati Batchat Samuha, supported by ActionAid
Kusum Kumari Tharu, 30 attending a REFLECT meeting in Nepal. Kusum was a founding member of a local womens group, Sarashwati Batchat Samuha, supported by ActionAid.
Photo: Nayantara Gurung Kakshapati/ActionAid

Women hold only a fifth of the world’s parliamentary seats and they are underrepresented as voters. It goes without saying that this is a reflection of gender inequality and must be addressed in the name of upholding women’s rights. However, it is also a barrier to the effective functioning of democracy.

Out of sight out of mind - political decision making processes are not gender blind

When women are underrepresented in politics, their interests are underrepresented in public life. The way in which government revenue is spent, services delivered and laws are made is never ‘gender blind’. The economist Janet Stotsky points to several studies that show that women economists and voters prioritise government policy which addresses inequality and supports vulnerable people who are poor, unemployed or in ill health.

These are issues that affect women personally. They are disproportionately represented amongst the poor and in the role as carers of children, the elderly and the sick. When the public services they rely on are absent, deprioritised or cut by the male dominated state, women have little or no time available to participate in political life and demand or deliver better government policy.

And so the cycle of women’s political inequality continues

As well as time constraints, the barriers to women’s political participation are also social. Political decision making happens in ‘smoke filled rooms’, pubs and bars, men only teahouses and often late into the night. These are often male spaces where women’s participation is prevented, discouraged or socially frowned upon.

The schmoozing, networking and literal one-upMANship of politics isn’t always an option for women. As deputy leader of the Labour party Harriet Harman put it earlier this month:

"I couldn't hang out drinking in the bar when I was feeling sick from pregnancy or rushing back home to put the babies to bed. Because I didn't conform, the punishment for being different was often nasty."

Threats against women in the public eye

For women in the countries where we work, the consequences of breaking from social norms and into public life can indeed be nasty – life threatening in fact, women human rights defenders globally increasingly face threats and acts of violence.

ActionAid works with women to achieve political empowerment and challenge social barriers through collective action. By creating spaces where women can safely come together and discuss their needs and daily challenges, they often identify solutions. By taking these solutions to local decision makers and demanding change, they enter public life and advocate for change.

What can be done to support women to fight inequality?

In a community we work with in Nepal, this collective action has led to the establishment of a local government supported community childcare centre. This facility supports women in their childcare work, thereby freeing up their time to participate more actively in politics if they choose to. Thereby breaking (or at least cracking) the cycle of women’s political inequality.

If political leaders really want to end stale, male and pale politics, it is the barriers to women’s equal participation in democracy which need to be addressed. Decision making processes must be more inclusive and women’s multiple roles must be supported and recognised so that they are safe and free to challenge political inequality.

Ideally without having to spend ages thinking about what to wear.

On Wednesday a court in Uganda ruled that UK-listed oil giant Tullow Oil must now pay the country $407 million, after declaring that tax incentives the company had benefitted from were illegal. But this great news is only part of the story of a country starting to stand up for a fairer tax system.

ActionAid Uganda march for tax justice
ActionAid campaigners in Uganda march for tax justice
Photo: ActionAid Uganda

Ugandan revenue authority wins $400m case against Tullow Oil

This week’s ruling is significant as it shows how the world’s poorer countries can take action to ensure they get a fair deal from the multinational corporations that operate there. In the case against Tullow Oil, the company had been granted a tax break as part of an investment agreement with the government – however the court ruled that this agreement with Tullow was illegal, because the individuals that had originally negotiated the agreement didn’t have the authority to do so.

ActionAid campaigners across Africa have been pushing governments to stop giving away harmful tax breaks in the mistaken belief that they encourage investment. ActionAid’s "Give us a break" report showed that developing countries lose out on $138 billion through these deals every year.

Responding to the judgement against Tullow, Arthur Larok, ActionAid Uganda’s Country Director said:
“The Ugandan Revenue Authority’s win over Tullow is evidence that big foreign companies’ self-benefitting accounting practices can be countered and combatted by tax authorities in developing countries. We need our taxes for our own development.”

ActionAid’s campaign pushing tax justice up the agenda in Uganda

This week’s news is just the latest development in a country increasingly moving against an unfair tax system that deprives the government of vital revenues.

In 2013 ActionAid’s international tax campaign launched in Uganda, raising issues of tax justice and how tax avoidance affects people living in poverty. Communities across the country took action and over 40,000 people joined the campaign against unfair tax treaties and multinational companies’ use of tax havens.

ActionAid Uganda research has found that many of the international tax treaties the Ugandan government has signed are leaving the country short-changed. Tax revenue that should finance development is being given away by allowing companies to move profits out of the country at low to zero rates.

Uganda has signed fifteen tax treaties, of which five are still waiting for final ratification, however, ActionAid Uganda’s analysis shows that there is no clear evidence that the country has benefited from the tax treaties already ratified.

Ugandan government rejects unfair tax deals

Responding to the campaign, the Ugandan government has listened to the huge wave of public pressure and announced it will stop negotiating and signing all tax treaties until it has a policy in place to make sure the country is getting a fair deal. This is a huge step forwards in a country where one in fifteen children die before their fifth birthday.

The international campaign against tax dodging is growing. Many of the world’s poorer countries are standing up to unfair tax rules and tax dodging companies to demand they get their fair share.

Join campaigners around the world demanding tax justice and add your voice:

New evidence has just emerged that shows that the huge UK mining company, Vedanta, has been shifting profits out of its Zambian copper mining division into the tax haven of Dubai.

Campaigners in Zambia protest Vedanta.
Campaigners in Zambia protest Vedanta.
Photo: Andrew Masiye, ActionAid

Using a tax haven?  

A Zambian Audit Committee report states: "Copper was being sold by KCM (the Zambian copper mine owned by Vedanta) to Fujairah Gold, a subsidiary of Vedanta in Dubai in such a way as to result in an under-pricing of metal sold."

This under-pricing of copper means that Vedanta could shift its profits out of its Zambian subsidiary, paying less corporation tax there, and into its subsidiary in Dubai, where it would pay no corporation tax on those profits.

This damning evidence, uncovered by a recent UK court case, supports claims from ActionAid campaigners in Zambia that Vedanta has been dodging taxes there. ActionAid understands that Vedanta disputes the accuracy of the GTAC report. 

Patrick Nshindano, ActionAid Zambia Campaigner said: "People here are outraged; it is all over the media. Vedanta needs to prove to the Zambian people that it is not tax dodging and depriving the country of vital revenue that could be spent on desperately needed public services."

A leaked video of Vedanta boss 

This new instalment comes only weeks after a leaked video revealed Anil Agarwal, boss of Vedanta, bragging about the billions in profit they make in Zambia – in stark contrast to the very little tax it pays there. Anil Agarwal has still not explained himself or apologised for the video, even after it caused a storm with protesters taking to the streets in Zambia and thousands of UK campaigners emailing him to demand he comes clean.

So it seems the evidence just keeps stacking up against Vedanta and this new revelation is just one more piece in the puzzle. However, the company now has to come clean on its entire global tax affairs. Only with this global picture can we make sure Vedanta pays its fair share of taxes in one of the world's poorest countries.

As our Tax Justice campaign goes from strength to strength, the UK Government has agreed that country by country reporting is vital for developing countries to hold foreign tax dodging companies to account. ActionAid UK's Policy Team investigates Europe's progress.

ActionAid activists from around the UK protesting outside the Barclays AGM to demand that Barclays stop helping businesses set up in tax havens
ActionAid activists from around the UK protesting outside the Barclays AGM to demand that Barclays stop helping businesses set up in tax havens
Photo: Matt Alexander/Press Association

The European Commission is running into criticism from NGOs, including ActionAid, for awarding the job of assessing the impact of country-by-country tax reporting by banks to the accounting firm Pricewaterhouse Coopers (PwC), which has declared in public that it opposes this kind of reporting.

This issue matters because citizens in developed and developing countries alike won’t trust the international tax system without a much clearer sense of where multinational companies are making their profits and paying their taxes, and how much tax they are paying.

The European Union has already decided that banks must report their turnover, profits and taxes by country. The assessment is meant to decide whether these reports should be made public or not. Since PwC has made clear that it thinks they shouldn’t be, the firm is clearly an inappropriate choice to carry out the assessment and should withdraw at once.

As it happens, Barclays Bank has voluntarily released such a report this week, saying that it wants to engage with its stakeholders “on an informed basis”. The report is significant because, whatever PWC may think, a very large European bank has shown that it not only can publish this information but evidently thinks it’s a good idea to do so.

Barclays’ new report shows big profits in tax havens

What Barclays has published is a breakdown by country of its turnover, pre-tax profits and taxes paid in 2013, plus the number of people it employs in each country. The report underlines the point that transparency is essential to understanding big companies’ tax arrangements, provided the right kinds of information are published. But it also shows why more disclosure can only be a first step towards addressing problems which have brought the global tax system into disrepute.

Among other things, the figures show that in 2013, Barclays reported 27% of its worldwide pre-tax profit in tax havens, almost all of it in Luxembourg and Jersey. The corporate income taxes which the bank paid in these places would only amount to 2.2 per cent of this profit (see important footnote below).  By way of comparison, the headline rate of corporate tax in the UK is 21%.

We aren’t drawing any conclusions here as to what these figures might say about Barclays’ tax arrangements: there are a number of possible explanations for them, none of which would imply any wrongdoing by the bank. What the figures clearly do, however, is to give detail and specificity to the general point that tax havens are very important to the profitability of big banks. That’s why the evaluation of the pros and cons of publishing such reports can’t be left to those who oppose the very idea.

Transparency and beyond

But the figures also underline the point that transparency often poses questions rather than answering them. Should a bank be able to book more than a billion pounds in pre-tax profit in a jurisdiction where it only employs fourteen people, like Barclays does in Luxembourg? And if not, then what should be done about it? The answer to that question takes us beyond transparency and into a much deeper debate about the large and often harmful effects that one country’s tax rules can have on others.

Find out more: Read our FAQs on our Tax Justice campaign

 

Important footnote: Barclays reported pre-tax profits totalling £2,464 billion for Luxembourg, Jersey, Switzerland, the Isle of Man, Monaco, Mauritius and Guernsey in 2013 and paid total corporation taxes of £53 million in these jurisdictions. Total pre-tax profits reported by country, before deduction of intra-group eliminations, dividends, recharges, asset transfers, hedging and other items, were £9.081 billion. Barclays points out that taxes are often paid over multiple years, so there may not be an exact equivalence between the pre-tax profits reported in a given year and the amount of tax actually paid in that year.

Tax dodging and The Birth of Empire

Ruth Kelly's picture Ruth Kelly International Tax Justice Policy & Campaigns Advisor

I’ve always thought that the East India Company might tell us something about how the global tax system works. Watching Dan Snow’s recent BBC programmes, The Birth of Empire, made me realise that the Company had an even more active role in the tax system than I had imagined.

The story of the Company is a mix of fabrics and famine; corruption and colonialism; trade and taxes. When they first arrived in India, East India Company employees were customs-tax-paying traders like any other. Mughal emperors allowed them to set up factories and trading posts in tiny settlements that would later become Madras, Bombay and Calcutta. In return, the emperors got access to lucrative British export markets.

 

Campaign ships calling for an end to tax dodgingCampaigners call for an end to tax dodging

East India Company as Tax Collectors

The early eighteenth century was a time of change. In 1717, the then emperor waived customs duties for Company trade. But by that point, the empire was disintegrating and regional rulers were becoming more powerful.

Decades of contested power and Anglo-French conflict followed before the East India Company won Bengal for Britain in 1765. In a dramatic shift, Company employees suddenly assumed the role of tax collectors for Bengal and later for most of the rest of India. As hopeless as they were at playing this role, the revenue they did manage to collect doubled the value of East India Company shares.

The origins of modern tax law

By the twentieth century, the East India Company's military exploits had brought it to near-bankruptcy and it had long stopped trading. But it remained one of the first and most iconic multilateral corporations. The way the Company operated must have influenced WWI Allies as they developed rules for taxing companies doing business in more than one country.

If tax is conceived as a way of paying for public goods and redistributing wealth, the current international system doesn’t make a lot of sense. If it is understood as a way of funding colonial expansion, it all begins to fall into place.

The East India Company’s monopoly over trade with the East Indies was originally granted because it could loan the Crown large sums of money to pay for colonial wars. Later, its monopoly position was tolerated because of the customs income its trade brought in. Over the years, the Company paid varying amounts of tax to the British authorities. But the notion that it should also pay tax in Company-controlled British India would have been nonsensical.

These days, most individuals and domestic companies pay most of their income tax to the governments that provide the services they use. This doesn't hold for companies operating in more than one country.

Rather than paying taxes to help fund the infrastructure and services they use to help them make money, multinationals pay most of their corporate income tax wherever they originally come from. Countries usually agree to divvy up taxing rights, allowing the host country to levy tax on some proportion of multinational profits. But the underlying assumption behind those agreements is that any tax revenue they don’t agree to share is collected by the multinational's country of origin.

The impact on the global South

Foreign investment has enormous potential, if Southern governments can put in place infrastructure and services to make it work for their citizens. It seems ridiculous that the current international tax system leaves them without the resources they need to make that investment. But if we adopt a colonial worldview, it makes perfect sense that multinationals pay most tax to the country whose flag they fly.