Making tax fair one treaty at a time | ActionAid UK

Making tax fair one treaty at a time

From launching the campaign for a fair UK-Malawi tax treaty to some exciting developments from our colleagues campaigning in Zambia and Ireland, it's been a busy few months for our Make Tax Fair campaign. Lots of progress has been made, but there's still a way to go yet. Read on to find out about the great news from Ireland and Zambia and how you can get more involved in our campaign. 

Tax is a building block of society and pays for essential public services that people living in poverty so badly need.

Closing a loophole between Ireland and Zambia

Back in 2013 ActionAid released an expose, 'Sweet Nothings', with research showing how Associated British Foods (ABF) - owner of household brands like Primark, Ryvita and Twinings - dodged taxes in places like Zambia.

At the time ABF were able to use a loophole in the Ireland-Zambia tax treaty to reduce its tax bill by an estimated US$10.4 million between 2007 and 2013. Tax treaties are agreements between two governments that divides up which gets the right to tax money flowing between their countries 

That $10.4 million is enough money to pay for 18,000 Zambian children to go to school for a year!

Classroom Zambia

Along with colleagues from across the ActionAid Federation, we launched a campaign to tackle this type of tax avoidance. We're very happy to announce that two years on, the Ireland-Zambia tax treaty has been renegotiated and the loophole that ABF took advantage of is now history!

We know that this pressure can work! The fact that this tax treaty was renegotiated goes to show that it is well within the power of our governments to make tax treaties fairer for poorer countries. 

Zambia is just one of many poorer countries with restrictive tax treaties. That's why we're now campaigning on the outdated UK-Malawi treaty. 

Next up... Malawi

Malawi is the poorest country in the world. It has one of the globe’s highest rates of maternal mortality and desperately needs more funding to pay for vital public services. When these services aren't available, it is often women and girls who pay the price, for instance - by having to provide unpaid care work in their families and losing out on the most basic healthcare services like pre-natal care.

One nurse may be looking after 80 patients; they cannot manage to provide the quality of care that is required because their workload is just too heavy.

One woman who has personally seen the impact of inadequate public services on healthcare workers and patients in Malawi is Harriet Bwalali (pictured below), the head of the Malawi nurses union. She says: "Currently our health sector is faced with a lot of challenges. You may find that there are no essential drugs in most of the hospitals."

Harriet Nurses Union

"One nurse may be looking after 80 patients," she continues. "They cannot manage to provide the quality of care that is required because their workload is just too heavy. They are taking from us - the vulnerable people. These agreements (treaties) should benefit both sides."

This agreement was signed in 1955, whilst Malawi was still a British colony called Nyasaland. There is no reason why, in the modern world, British companies in Malawi should still be able to use this outdated treaty to avoid paying their fair share of tax.

It's time to make UK tax treaties fair

Since February we’ve been campaigning with ActionAid Malawi for their country's outdated treaty with the UK to be renegotiated to make it fairer to one of the world's poorest countries. Over 30,000 campaigners across the UK and Malawi have signed our petition, and both governments are starting to feel the heat.

We’ve just heard that the discussions are close to completion. So time is running out to influence negotiations and make sure the new treaty works for Malawi.

But Malawi is just the start. The UK has some of the most restrictive tax treaties with developing countries, and they all need to change.

So what now? 

Though our campaign has been making waves, a lot of MPs still don't know enough about how harmful tax treaties can be for developing countries.

As we've seen with the Ireland-Zambia tax treaty, governments do have the power to make the agreements fairer. That's why we need to make sure our MPs are aware of this massive issue affecting the world's poorest people.

So please, email your MP to encourage them to put pressure on David Gauke, Financial Secretary to the Treasury - who is responsible for the outcome of the negotiations of all the UK's tax treaties. Email your MP

Photos: ActionAid, Jason Larkin/Panos Pictures/ActionAid and ActionAid