Financial Transparency Coalition

Christian Aid

More than a billion people across the world will go to bed hungry on Saturday, the day the United Nations has designated World Food Day.

The growing food crisis, which is leaving millions of people without enough to eat, has inequality at its root. Most markets have plenty of food, yet the price has risen beyond the reach of ordinary people.

This income disparity is particularly stark in Latin America and the Caribbean, recently labelled the most unequal region in the world.

Ten of the 15 most unequal countries in the world are in that region, according to a United Nations Development Programme report released in July 1010. The report also finds that it is possible to reduce inequality through the implementation of public policies that lift the region out of the inequality trap.

Christian Aid’s own report into the Millennium Development Goals, We’re All in this Together (September 2010), highlights the way that a failure to address inequality has prevented much greater progress being made. In particular, gender inequality and inequality between groups is of fundamental importance. Infant mortality rates are higher among the indigenous population in a wide range of Latin American and Caribbean countries – as much as three times higher than among the non-indigenous population.

Guatemala is a particularly good example of how inequality relates to food poverty. Guatemala is the world’s fifth largest exporter of coffee and sugar, but also has the dubious distinction of having the fifth highest level of chronic malnutrition.

This state of affairs is no accident. It is a direct result of the extremely regressive tax regime in Guatemala and many other Latin American countries. The poorest pay a far higher proportion of their income on the equivalent of VAT and other indirect taxes, whilst the business elite enjoy a very generous regime of tax incentives.

Christian Aid’s Hannah Richards recently returned from a fact-finding trip to Guatemala where she met children suffering from Kwashiorkor, a form of acute malnutrition.

She explained: “Even the farmer who cannot produce enough food to feed her family all year has to pay tax on the few products she has to buy: oil, salt, clothes.

“If the Guatemalan government is to have any chance of overcoming the alarming rate of childhood malnutrition amongst its citizens, it will need revenue. The only reliable, sustainable source of that revenue is tax.”

Encouragingly, the Vice-President of Guatemala Dr Rafael Espada spoke last month at the annual conference of the inter-governmental, inter-NGO Task Force on Financial Integrity and Economic Development, of which Christian Aid is a member of the Coordinating Committee. Dr Espada highlighted the fact that 50 per cent of Guatemala’s children under five years of age are malnourished, and identified taxation as the key to ensuring broader progress. In particular, Dr Espada emphasised the damage done to the country by international tax avoidance and tax evasion, not least by multinational companies, and pledged support for the key global financial transparency measures for which Christian Aid is campaigning.

Christian Aid has estimated that Guatemala loses more than $50 million a year in tax revenues through illicit financial flows in trade with the EU and USA, and we support a local think thank, ICEFI (Instituto Centroamericano de Estudios Fiscales), which is currently examining the issue further, while our Task Force colleagues Global Financial Integrity continue to work closely with Dr Espada and the Guatemalan government.

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The Task Force on Financial Integrity and Economic Development addresses inequalities in the global financial system that penalize billions of people, and advocates for improved transparency and accountability.

Christian Aid is a coordinating committee member of the Task Force on Financial Integrity & Economic Development.

For additional information please visit http://www.financialtransparency.org