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What does tax have to do with child hunger and health?

What does tax have to do with child hunger and health?

A blog entry by Hannah Edwards, SOS Children's Press Officer, about international companies working in poor countries, and how effective taxation could improve the lives of children living in poverty.

Over 2 million children die each year from malnutrition-related causes and millions more from preventable illnesses. To address this calamitous situation, charities have naturally channelled their resources and energies into supplying food and nutritional supplements and sponsoring health clinics and vaccination initiatives.

Nevertheless, they do so whilst recognising this kind of aid will never be enough. Significant inroads into high rates of hunger, poverty and disease can only be made when developing countries have the right governance and business environment to support their own people.

UK charities are therefore as busy as ever campaigning about problems which hold back the economies of developing countries. This is particularly true this year, as the UK government prepares to host a special hunger summit before the G8 meeting in June. The G8 leaders are therefore being lobbied on issues such as aid, climate finance and land grabs. But perhaps the ‘hottest topic’ being pushed up the agenda by campaigners is tax evasion.

This is an especially resonant issue in Britain, at a time when the government and UK consumers are acutely aware how some large corporations make significant profits in Britain but pay no tax here. If such tax avoidance affects us, it’s not hard to imagine how it hits poor countries.

So for example, ActionAid highlights the case of an international food company which sources sugar from Zambia. The company has nearly 1,900 full-time workers in Zambia, providing vital employment and taxes through their workers’ wages. However, through a complex structure of tax avoidance payments to other countries and with a foreign co-operative owner, the Zambian arm of the company paid just 0.5% of its pre-tax profits in corporation tax over the last five years.

Zambia relies on tax from corporations to help pay for services such as food assistance, health and education. Without enough money to improve these services, children study in overcrowded classrooms and medical centres go without the resources and staff they need. So, in a major sugar-producing town in Zambia, two malnourished children die each month and children must learn standing up because there aren’t enough desks at school.

Zambia is just one of many developing African countries which relies on its agricultural produce and natural resources to build its economy. If companies profiting from these resources paid a fairer share of tax, the country would inevitably be richer and less reliant on handouts and international assistance.

Campaigners are therefore hoping that governments and leaders will decide to act together and review the tax and bilateral treaties which make tax avoidance possible. Because if tax loopholes could be closed in developing countries, fewer children would go hungry or without proper medical care. That’s why the campaigning of charities continues, alongside all their other work.