Financial Transparency Coalition

The Latin American country is wealthy, but the extreme gap between rich and poor causes a multitude of problems

Guatemala City | Photo: Chensiyuan, Wikimedia

Isabel is four years old. Her belly and ankles are swollen and she walks as if it hurts a little bit. Her family, who live in eastern Guatemala, have not had the means to feed her properly, so she is being treated for kwashiorkor – acute malnutrition.

Even though it is classified by the World Bank as a middle income country, the level of inequality in Guatemala is such that almost half its children under five suffer from chronic malnutrition. This is the fifth highest rate of chronic malnutrition in the world, higher even than that in Haiti, which is by far the poorest country in the Americas.

Isabel will stay in the clinic supported by Christian Aid until she is well again. In some ways, she is lucky. At this time of year when the previous year’s harvest has run out, children do die of hunger in this part of Guatemala.

Isabel will recover from kwashiorkor but she will never recover from the irreversible effects of chronic malnutrition, which severely stunts physical and mental development. There’s no excuse for this anywhere, and especially not in a country with as much wealth as Guatemala. Along with the dubious distinction of having the fifth highest level of chronic malnutrition, it is also the world’s fifth largest exporter of coffee and sugar.

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. As a result, one in 20 Guatemalan children does not reach the age of five due to infectious and diarrheal diseases that are easily preventable and treatable. Two-thirds of the country’s children do not complete primary school on time and illiteracy levels are closer to the average for sub-Saharan Africa than to that for Latin America.

Guatemala stands out as much for its indicators of wealth as for those of poverty. The country with the highest number of private aeroplanes and helicopters per head in Central America is also the country with the highest rate of women dying from complications in pregnancy because they lack affordable transportation to a health centre.

In an effort to address these extreme inequalities, a Christian Aid-supported thinktank, the Central American Institute for Fiscal Studies (Icefi in Spanish), hosted an international symposium in Guatemala City last week. It was attended by Simon Pak, an internationally recognised tax expert, with a view to strengthening the Tax Justice Network in Latin America and tackling some of the more regressive policies in the region. Because Guatemala has one of the lowest tax burdens in Latin America, as well as one of the most generous regimes of tax breaks, Icefi chose to focus on the country as a case history for regressive tax policies in the region.

The report focuses on three human rights – those to food, health and education – and on three serious threats to these rights: child malnutrition, maternal mortality and low primary school completion. These issues were selected because they have been declared national priorities by successive governments in Guatemala. They also represent three key fronts in the struggle against poverty, to which all states have committed through the framework of the UN millennium development goals. If they are to have any hope of achieving the goals, and reducing the number of damaged children like Isabel, then governments need money. And the only reliable, sustainable source of that money is tax.

—

This blog was originally published by The Guardian’s Comment Is Free.