Colombia Tax Plan
On July 6, 2021, Colombia’s Independence Day, President Ivan Duque presented a new $4 billion tax plan. The plan aimed to help pay for social programs and pandemic-related expenses. Due to Colombia’s new tax plan, thousands marched through Colombia’s main cities in protest. Many are angry at their government since it did not solve any of the populations’ problems. Colombian citizens believe that the new Colombia tax plan is not doing enough to help their people.

Tax Reform

This new tax reform is much smaller than the previous $6.3 billion packages that the Colombian government presented in April 2021. The government withdrew the larger package due to mass demonstrations and lawmaker opposition. Even after many protests and marches, President Ivan Duque insisted that this plan is vital at a time of rising debt. The Colombian government must pass the plan to help social programs stay afloat.

As Duque opened Congress’s second legislative period of the year on Colombia’s Independence Day, Duque told legislators the “social investment law, which we will build between all of us, is the largest jump in human development in recent decades.”

The new reform places a higher tax burden on the company’s earnings. It discards the $6.3 billion package to impose a tax on basic items ranging from coffee to salt. The reason for protests for the new plan is that the plan seems to not be able to do enough for spending on education and job creation. In 2020, the economy contracted 7% and pushed an additional 3 million people into poverty, worsening conditions in Colombia.

The People of Colombia

Francisco Maltes is leading one of the groups of anti-government demonstrations while serving as the president of the Central Union of Workers. Malte’s union is part of a collection of unions that plans to present congress with 10 proposals on addressing Colombia’s social and economic crisis. Dissolving the nation’s riot police is part of their plans as well. This is creating a basic income program for workers that would make monthly payments of $260 to 10 million people. Maltes and his union tie directly into the recent string of protesting. Maltes has stated that protests will continue because President Duque has failed to solve Colombia’s list of problems.

During the Independence Day demonstrations, protestors also stated that they wanted justice for the death of many youths who police recently killed. Human Rights Watch is an international non-governmental organization that conducts research and advocacy for human rights. It is currently collecting data linking police to the deaths of 25 confirmed young protesters during the recent wave of demonstrations. The number of deaths still remains a mystery due to many local organizations stating that the death count could be higher.

Withdrawal of New Tax Reform

After many months, the Colombian government unveiled Colombia’s new tax plan, much to the Colombian people’s dismay. The purpose of the Colombia tax plan is to address the social and economic crisis. However, the verdict across Colombia’s population is clear. The verdict on the impact of the reform punishes the middle-working-class and ruins any hope of economic recovery. This will push many people into poverty. Unless an agreement comes to fruition in Congress in the coming months, Colombia could risk its post-pandemic social and economic recovery.

Colombia has a rare opportunity to create a better and more ambitious tax reform through the current circumstances. The leadership of President Duque must bring Colombia together and come to a consensus, to make a version of this proposed reform bill a reality.

– Aahana Goswami
Photo: Flickr

Menstrual Health in NamibiaOn March 17, 2021, Namibia made the decision to no longer tax menstrual products beginning in the 2022-23 financial year. Currently, these products are taxed 15%, which makes it difficult for many to afford these essential items. The removal of this tax is an important change wherever it takes place. It is especially significant in places like Namibia where 73% of households do not even have adequate handwashing facilities. The tax elimination will not fix all issues related to the inaccessibility of menstrual products, however, it is a major step toward improving menstrual health in Namibia.

The Cycle of Period Poverty

Menstrual health is vital to one’s overall health. Globally, one in five girls misses school due to limited access to menstrual products. This means girls are missing up to one week of school every month. Consequently, students may find it difficult to keep up with their classmates and succeed in school. As getting an education is one of the most effective ways for people to lift themselves out of poverty, this puts girls at an even greater disadvantage and maintains the cycle of poverty.

This phenomenon is commonly referred to as period poverty. Period poverty is an unfortunate reality in Namibia and across the world. The goal of eliminating tampon tax and increasing the availability of menstrual products is to ensure no one misses opportunities simply because they are menstruating. Moreover, no one deserves to have to choose between buying sanitary products or buying food. Furthermore, no one should have to miss work or school simply because they cannot afford menstrual products. Making these products more easily available will reduce poverty and improve menstrual health in Namibia and around the world.

Women resort to alternatives such as rags, paper towels or old pads when they do not have access to menstrual products. The use of these items puts girls at risk of infections. The inaccessibility of sanitary products has also been linked with poor mental health and overall distress. These effects are easily preventable when menstrual products become accessible.

Menstrual Stigma

Many people do not consider menstrual health when trying to improve overall health. In many parts of the world, menstruation is considered unclean and shameful. This prevents many women from participating in society while menstruating. Access to menstrual products, like any other products that improve sanitation and health, is a human right. Regulations removing menstrual tax make these products more affordable and accessible. The removal of tampon tax will not take away the stigma surrounding menstruation, however, it will help protect people from disease, improve mental health and ease the completion of daily tasks while menstruating.

Namibia’s deputy minister in the Ministry of Information and Communication Technology, Emma Theofelus, states, “Period poverty is one of the undignifying processes women and young ladies have to experience. Your period is such a natural process and not something they can opt out of. There are not enough social and economic circumstances to create safety for young women.” Since menstruation is a natural experience for nearly half of the population, equitable access to sanitary products should not be negotiable.

Addressing Period Poverty Globally

Namibia is not the first country to eliminate tampon tax, countries such as Kenya, India, Australia and South Africa have also done so. Other countries, such as Germany, have decreased the amount of tax. However, in most of the world, including most U.S. states, these essential items are still taxed, which makes menstrual products unavailable to many. The state of menstrual health in Namibia is sure to improve now that tampon tax is done away with. The rest of the world should look to Namibia as an example and make similar changes. Every girl and woman deserves to menstruate with dignity and Namibia is one step closer to making this a reality.

Harriet Sinclair
Photo: Flickr

Digital Payment System in Pakistan
Pakistan has a primarily cash-based economy that thriving illegal markets and low government revenue plagues. A new digital payment system in Pakistan could change this. The State Bank of Pakistan (SBP) and the Pakistani government worked in collaboration with the Bill and Melinda Gates Foundation to launch this brand new digital cash transfer system. Additional support came from the United Nations, the World Bank and the United Kingdom.

This new digital payment system called Raast or “direct way” can instantly transfer money between two entities. Although the idea is not new and there are several other financial transaction systems on the market, Raast is the first one that received sponsorship from the Pakistani government, linking financial institutions and government entities. The government’s main goals are to make money transfers more transparent and thereby reduce corruption, increase government revenue and create a more inclusive economy.

Increased Transparency, Tax Revenue and a Less Corrupt Economy

A payment system such as Raast records every transaction in real-time and establishes a log of payments. This allows users to keep track of their transfers, and since the information is visible to all involved parties, users can report complaints or mistakes much more easily. When the Pakistani government and its citizens use Raast, it makes it possible for citizens to receive their pensions, salaries or other payments from the government much more quickly. The increased efficiency and transparency also supports small businesses and other micro-enterprises. Instead of paying cash or sending checks through the mail, they can instantly pay suppliers and distributors. This makes running a business more efficient, reliable, accessible and less prone to corruption.

The new digital payment system in Pakistan also makes it easier for the government to collect taxes by using the technology to track how much people owe and when they made payments. In 2019, the World Bank reported that Pakistan’s government collected half of what, theoretically, it should have been able to take based on its economy. Tax evasion is widespread, but it is also complicated and timely to file taxes in Pakistan. The World Bank found that there are many individuals and companies that would like to file taxes, but do not because of the time and money the process requires.

A More Inclusive Economy

In 2018, the Global Findex reported that only 7% of women age 15 and older had a bank account, and of the most economically disadvantaged 40% (men and women), 14.2% had an account. Particularly during the pandemic, it has been difficult for these underserved groups to receive government support without a bank account. Raast has the potential to serve vulnerable groups because it does not require people to travel to a physical bank, and is cheaper and easier for individuals to set up than a traditional bank account. In a report about payment systems, the World Bank stated that “secure, affordable, and accessible payment systems and services help expand financial inclusion, foster development and support financial stability.” However, without proper implementation, an endeavor such as this digital payment system in Pakistan could fall short of its goal.

In a statement at the launch, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA) Queen Máxima, discussed how important it is for all banks and service providers to adopt the new technology and to encourage individuals to use it instead of cash. If enough people and institutions use the program, it will reach its accessibility potential and spur economic growth. As Queen Máxima stated in her keynote address, the hope for this new digital payment system in Pakistan is above all to create a more digital and accessible economy.

 Caitlin Harjes
Photo: Flickr

Period poverty in ChinaThe monthly cost of purchasing menstrual sanitary products is not a small amount for females worldwide. “Period Poverty” refers to the inability to afford access to pads, tampons, or liners to manage menstrual bleeding. A campaign in China, is working on addressing period poverty for its girls and women. However, it still remains a women’s rights issue globally.

The General Problem

The International Federation of Gynecology and Obstetrics (FIGO) reports that around 10% of young women around the world are now unable to afford period protection. FIGO also found that 12% of women have to improvise with devices that are potentially ineffective and unsafe. According to UNICEF, there are more than 500 million females that lack a proper place to change their sanitary protection during their period. Period poverty causes long-term impacts of health and hygiene for girls and women. Time management, the chance of receiving education and employment are also affected by period poverty. All of these factors influence a woman’s lifelong development and wellbeing.

Period Poverty in China

The situation of period poverty in China is not much different. Many women and young girls, especially in rural areas, cannot afford feminine hygiene products. Instead of sanitary pads, impoverished women have to use toilet paper or old cloth. Any available yet unsafe materials on hand — even bark for some women in extreme poverty — are substituted to get through the period. Unfortunately, the lack of basic menstrual knowledge and the common menstruation taboo in China only worsen the situation. It is difficult and embarrassing to practice optimal hygiene with dignity in China. As a result, many girls in rural China skip classes or even leave school once they start menstruating.

Campaign for a lower tampon tax

In recent years, the Chinese public is growing more aware of period poverty in China. They are calling for more affordable sanitary products. Additionally, the public advocates for more humanitarian public health policies that take women’s biological needs into accounts. As of 2020, the Chinese government regulates a 13% sales tax on feminine sanitary products. That is 4% higher than the 9% tax for essential daily necessities such as grain, water and contraceptives.

Many other countries, including India and Malaysia, have either exempted or reduced the tax on sanitary products. They have done so for the sake of gender equality. In response, a couple of online campaigns emerged in China in the past few years. The campaigns appeal for a lower tampon tax in the country.

The “Stand by Her” Project

Before the national public health policy can ameliorate, some philanthropists and social organizations have jumped to the cause. They have stood up first to help the low-income women in underdeveloped regions. So far, the “Stand by Her” is one of the most well-known and large-scale projects that deal with period poverty in China.

Liang Yu Stacey, a 24-year-old Chinese feminist activist, initiated the “Reassurance for Sisters Fighting the Virus” online campaign in early 2020. She aimed to raise money to provide feminine sanitary products for the health care workers fighting against COVID-19. The project then extended to a broader scale and evolved into “Stand by Her.”

“Stand by Her” is a voluntary foundation that coordinates donation, procurement and distribution of hygiene products to under-age girls in impoverished provinces. The foundation regularly sends sanitary pads to women around China. In addition, the project also hands out brochures and holds lectures in middle schools to popularize menstruation and sex education. In the first phase of 2020-2021, the team continues to plan to help more than 6,000 girls from 33 schools across China. Within 3 days of opening the donation portals, “Stand by Her” raised 368,700 RMB (54,500 USD).

The online conversations, campaigns and donations display some positive signals in the area of menstruation. Feminine hygiene is gradually breaking away from the conventional social taboo. Reducing tax on women’s menstrual products would be a win for women’s rights in China.

– Jingyan Zhang
Photo: Flickr

Poverty in Sweden
When discussing global poverty, most tend to think of cases of extreme poverty. However, poverty exists everywhere, even in prosperous countries. Sweden, a Nordic country in Northern Europe known for its progressive politics, is home to a population of 10.3 million. Although Sweden is a relatively wealthy country, 16.2% of its people are at risk of falling into poverty. Here are the top 10 facts about poverty in Sweden.

Top 10 Facts About Poverty in Sweden

  1. As referenced above, Sweden’s “risk of poverty” is defined as meeting the criteria for severe material poverty or low-income standards. Citizens with low-income standards are those whose household income is inadequate to afford necessary living costs. Currently, 6% of Sweden’s population (570,000 people) fall under low-income standards.
  2. In 2016, Statistics Sweden announced that less than 1% of the population in Sweden suffers from severe material poverty. Sweden defines “severe material poverty” by not being able to afford at least four of the following six components: unforeseen expenses, a week’s holiday per year, a meal with meat or fish every other day, satisfactory heating and housing, capital goods and bills.
  3. Since 2015, Sweden’s unemployment rate has declined by more than 0.35% per year. In 2018, the unemployment rate was 6.35%, which was a 0.37% decline from 2017. However, due to COVID-19, unemployment rates grew to 8.2% in Sweden as of April 2020. 
  4. Sweden’s welfare system reduces poverty across the country. Sweden offers a standard minimum income for all its citizens, providing approximately 60% to 70% of the average wage in Sweden. Swedish law additionally ensures all workers earn 25 paid vacation days and 16 public holidays each year.
  5. Sweden offers equality between genders, especially in the workplace. In 2009, The Swedish Discrimination Act required employers to promote equality between men and women and ban workplace harassment. Then in 2016, Sweden updated its parental leave for both parents to have three months of paid leave. Nevertheless, Sweden has room for improvement, as there is still a 10% wage-gap between men and women.
  6. Sweden’s incorporation of equal education opportunities, beyond gender or socioeconomic status, help increase opportunities for Swedish citizens, thus limiting poverty expansion. Sweden’s Education Act protects free education equality for citizens aged 6-19. In 2017, Sweden reported more than 90% of Swedish students received leaving qualifications equivalent to that of a United States high school diploma. 
  7. The free, universal healthcare in Sweden aids the country in fighting poverty. The healthcare system is highly tax-funded, and it ensures all citizens have equal access to substantial health benefits. Sweden’s Health and Medical Service Act protects universal healthcare, and Sweden’s central government oversees it.
  8. The life expectancy of Sweden is one of the highest in the world: 84 years. Municipal taxes primarily fund elderly care in Sweden. Statistics from 2014 show that the total cost of elderly care was SEK 109.2 billion, or more than USD 12.7 billion. Yet, the patients compensated for only 4% of the total cost themselves.
  9. Sweden’s aim for equal opportunities benefits everyone, including the disabled. The Swedish government and parliament authorized several disability policies. The policies cover accessibility regulations for disabled citizens across housing, transportation and employment sectors. 
  10. Although Sweden offers its citizens free education, universal healthcare and a standard minimum income, the country’s taxes are monumentally high. The tax range in Sweden is 29.2% to 35.2%, depending on the citizen’s income, compared to the lowest federal income tax in the United States, which is 10%.

As the Swedish government fixates on opportunities for its citizens, aiming for equality across genders, age and socioeconomic status, the country offers hope to its citizens that they will continue to reduce their poverty statistics.

Kacie Fredrick
Photo: Flickr

Healthcare in NorwayWhile many countries struggle to create and maintain an effective healthcare system, Norway has become a symbol of what a successful national healthcare system can look like. Norway is one of the kingdoms of the Scandinavian subregion of Europe. The country of 5.2 million people borders Sweden on the west and is east of the Shetland Islands. “Norwegian values are rooted in egalitarian ideals,” meaning that everyone should have equal opportunities. These principles are reflected in the country’s healthcare system.

Healthcare in Norway is designed for equal access, but it is by no means free. The country’s universal healthcare system is heavily subsidized by the government through taxation. Such high taxes have allowed Norway to run a broad welfare system that provides sickness coverage, unemployment coverage, social security and pension benefits that often allow even those who are low-income or impoverished to participate in healthcare. Here are eight facts about healthcare in Norway.

8 Facts About Healthcare in Norway

  1. All participants in the Norwegian healthcare system must cover all medical expenses up to 2040 krone (about $210) before they receive an exemption card. Then their treatment for the rest of the year is free.
  2. Norwegian spending on healthcare on a per head basis, which is currently at $6,187 per person, is the fourth highest in the world. The United States is highest at $10,600 per person.
  3. The Norwegian National Insurance Scheme is centrally controlled by the Norwegian Health Economics Administration (Helseøkonomiforvaltningen, HELFO); the administration of healthcare, however, is decentralized and handled by local municipal authorities. When Norwegians are traveling or living abroad, the country’s membership in the European Economic Area (EEA), a similar economic agreement to the European Union, and possession of the European Health Insurance Card allows them the same healthcare as the country they are staying in. After six months in Norway, documented immigrants can access healthcare. Visitors to Norway who are not members of the EEA are expected to pay in full.
  4. People can opt-out of the public system and choose private insurance instead. People will sometimes choose private insurance if they want to have certain procedures done quicker than the public system can handle. Nine percent of Norway’s population has private insurance at an average cost of 508 krone ($56) a month, and 91% of this insurance is covered by their jobs — making it relatively affordable.
  5. The Norwegian government has created a “Qualification Program” to deal with extended joblessness and poverty that might restrict affording healthcare. The program is designed to overcome social obstacles and a lack of skills through various activities. Participants usually find employment after four years.
  6. In Norway, life expectancy is 81 years old for men and 84 years old for women. This ranks the country 17th in the world. This longevity is attributed to a generally active lifestyle, a diet high in fish — specifically salmon —and a strong healthcare system.
  7. Although healthcare is robust in Norway, there are still areas of concern. Tobacco smoking has decreased, but there has been an increase in the use of a smokeless tobacco powder called snus, which is inhaled and can potentially increase the risk of oral cancers. In addition, childhood obesity is on the rise in Norway. Obesity among five to 19-year-olds has increased by more than 50% over the past decade.
  8. From 2013 to 2017, spending on pharmaceuticals increased by 40% in Norway, as national prescription drug use has increased. The Norwegian Health Economics Administration handles the reimbursement of the cost of pharmaceuticals. Distribution is highly regulated, as only community and hospital pharmacies can distribute medicine in the Norway health system.

Norway’s egalitarian and progressive ideals have helped make its healthcare system one of the best in the world. The country still faces challenges, including high rates of childhood obesity and cancer risk from smokeless tobacco. Norway is working to address these problems, for example by prohibiting the advertising of all tobacco products. The heavy taxation required for funding many public programs, including healthcare, often falls more heavily on those in lower-income brackets, but the government provides a thorough safety net to assist them. Norway has made great advances. The country remains a model of what a strong welfare state and an effectively run universal healthcare system can achieve.

Joseph Maria
Photo: Flickr

10 Facts About Corruption in Pakistan
Pakistan, a nation of 197 million, has long been an ally of the U.S. and has come a long way in combatting corruption and graft within its government infrastructure. Nevertheless, the 21st century has seen corruption grip the country. Pakistan rates 33/100 on Transparency International’s Corruption Index (lower numbers = more corrupt and vice versa) and ranks 133/180 in terms of corruption. GAN states that corruption is a significant obstacle to all forms of business in Pakistan, regardless of whether the actor is a large multinational, an international NGO or a Pakistani corporation. Despite efforts by the national government and provincial legislatures to reduce corruption, it still presents a severe stumbling block to national growth. NGOs, despite the massive hurdles that corruption creates, have filled in the gap and begun working across the country to fight it. Anti-Corruption Force Organization Pakistan (ACFOP) is one such organization with chapters active in every province of Pakistan providing representation for the marginalized and a voice for those who have suffered monetarily and physically as a result of corruption in the system. With that, here are 10 facts about corruption in Pakistan.

10 Facts About Corruption in Pakistan

  1. Corrupt Prime Minister Nawaz Sharif: The leak of the Panama Papers in 2016 revealed that Prime Minister Nawaz Sharif and his children owned four offshore companies through which they laundered money and facilitated bribes. Sharif received 10 years in jail by Pakistan’s anti-graft court, while his daughter Maryam received a seven-year sentence.  Sharif also garnered a lifelong ban from politics, effectively ending his hopes of a political dynasty.
  2. Corruption in the Army: Pakistan’s Armed Forces has a long history of corruption. According to Shamil Sams, writing for DW, the Pakistani government manages its own budget and can increase it without civilian oversight. Army officials have engaged in illegal activities such as cross-border smuggling, illegal toll collection at military checkpoints, illegally levying funds from private businesses and extorting landowners in the Okara region.
  3. Corruption in Law Enforcement: The presence of police corruption in Pakistan is a daily reality for a shocking number of Pakistani citizens. According to the Michelsen Institute, almost 100 percent of correspondents to a Transparency International survey reported daily solicitation of bribes by police officials. Policemen in multiple provinces have received accusations of performing extra-legal killings and torturing detainees. There is even a phrase for the culture of corruption in the law enforcement field; Thana Culture, an Urdu-derived word for police station. Human Rights Watch indicates that there is a critical lack of political will to reform law enforcement in Pakistan and that there is a framework of legal protections that shield law enforcement officials from accountability.
  4. Corruption in the Judiciary: Bribery is incredibly commonplace in Pakistani courtrooms. The Michelsen Institute found that 96 percent of all correspondents who came into contact with the judiciary encountered corruption in 2006 and that 44 percent had to pay a bribe directly to a court official. The procedure to select judges on a national level is highly susceptible to political favors, and the judges themselves receive an exemption from an audit by the National Accountability Bureau. The PTI party (Pakistan Tehreek-e-Insaf/Pakistan Movement for Justice) has made judicial reform one of its targets now that it is the head of the ruling coalition. It is currently considering numerous reforms to the judiciary to combat rampant corruption.
  5. Corruption in Rail Transit: According to Pakistan Today, corruption and mismanagement in public transportation are exceedingly common. In a 2010-2011 audit, the Pakistani government concluded that the lion’s share of Pakistan Railways’ financial deficit was the result of embezzlement and wastage of funds. Following the audits, there were numerous investigations to provincial and national level transit administrations. Another high-profile surplus scandal in 2014 prompted another wave of investigations, with the NAB (National Accountability Bureau) spearheading the effort.
  6. Corruption in Public Utilities: Transparency International found that almost 64 percent of citizens surveyed established power in their home through alternative methods, all of which fall under the purview of corruption. These methods include payments to office staff and having to make repeated payments in order to get services. Ninety-five percent of these correspondents also reported additional corruption when it came time to pay the bills. ACFOP has been active in this field, advocating for the poor in provinces like Punjab and Balochistan and offering legal counsel in their struggles against utility companies as a part of their mission.
  7.  Corruption in Health Care: According to research from the University of Karachi, petty corruption in health care is an increasingly dire problem in Pakistan. Its research uncovered the widespread presence of corruption in hospitals servicing low-income communities. It also found that out of 342 people surveyed, one-third encountered corruption in the form of paying bribes during admissions. People paid these bribes to doctors, hospital staff and even nurses. ACFOP has taken to social media and the public sector to raise awareness of corruption in health care on the provincial and national levels.
  8. Corruption in Taxation: Transparency International reports that corruption is prevalent among bureaucrats that involve themselves in tax collection. Its research found that tax inspectors and officials accounted for 14 percent of bribes that the average consumer paid out in a year. NGOs like the ACFOP and Transparency International Pakistan are working across all provinces of Pakistan to fight corruption in tax collection by identifying cases of corruption and lobbying local governments.
  9. Cricket Corruption: Corruption is so prevalent in Pakistan that it has leached into its sports teams. In 2011, members of Pakistan’s national cricket team received a conviction of receiving bribes from a bookmaker and agreeing to underperform at the team’s match against the British cricket team during the Lord’s test match. The International Cricket Council banned the players along with bookmaker Mazhar Majeed, and the players received prison sentences.
  10. National Accountability Bureau: Others have even accused the National Accountability Bureau, which is an organization that emerged in 1999 to fight corruption. In 2015, the Supreme Court of Pakistan accused the NAB of mismanagement. According to DAWN, two mishandled cases, one involving finance officers stealing from bomb victims and another dealing with land misappropriation, drew the ire of the Supreme Court, which claimed that “This represents serious maladministration and want of proper procedures and supervision within NAB.”

Hopefully, these 10 facts about corruption in Pakistan illuminate a critical but often overlooked shortcoming of one of the U.S.’s closest allies in the Middle East. It is important for a wider audience to see these facts so that NGOs around the world can do their part to help the people of Pakistan.

– Benjamin Mair-Pratt
Photo: Flickr

erasing tax havens
Currently, about 50 percent of countries have poverty rates that are lower than 3 percent. Despite the declining rate of global poverty, poverty rates in poor countries remain high. The existing global system allows for both wealthy companies and individuals to benefit within the global economy through tax avoidance with the use of tax havens, but erasing tax havens and having corporations pay more legitimate and realistic taxes could eliminate global poverty and inequality.

What are Tax Havens?

Tax havens are countries or territories where corporate houses register and operate. According to tax laws, these corporate houses do not have to pay taxes on the profits they make in the area where they operate. The corporate houses do not pay taxes based on the overall group economic performance of the companies but rather based on individual entity. The multinational companies also have an element of secrecy in that tax havens share limited to no information regarding finances with foreign tax authorities.

Effects of Tax Havens

The use of tax havens is not just unique to multinational companies; some wealthy individuals utilize the system as well. The mass amounts of unpaid taxes are denying the world’s poorest governments billions of dollars. In February 2015, a few rich individuals with ties to Kenya were storing more than $560 million in bank accounts in Switzerland. The hidden wealth in tax havens could salvage the lives of four million children and 200,000 mothers in African countries. The gap between the wealthy and the poor in the world grows wider every year, and tax havens primarily fuel it. This is considering that $7.6 trillion of personal wealth hides in offshore accounts that tax havens run. This negatively impacts the fight to eliminate global poverty.

In the 1990s, 5 to 10 percent of global profits from multinational companies shifted, meaning that the jurisdictions where the economic activity took place proclaimed the profits for tax purposes. By the early 2010s, 25 to 30 percent of multinational companies’ global profits shifted. According to the International Monetary Fund, the active practice of corporate tax avoidance around the world has put the global revenue losses between $200 billion and $600 billion and lower-income countries make up around $200 billion of the global revenue loss. There are approximately 650 million poor people globally who live beneath the international poverty line of $1.90 per day. If a new country emerged with a Gross Domestic Product of the $200 billion revenue from low-income countries due to tax havens, the country could eliminate global poverty just by giving $2 every day to those 650 million people.

The Unitary Tax Approach

One way multinational companies are trying to curb tax avoidance is through the apportionment reform programs or the unitary tax approach. Through the unitary tax approach, global governments would assess tax havens’ profits as a group rather than as individual entities. This method would apportion the profits that the tax havens make as a group to each of the countries where the companies operate based on how much economic activity took place in the respective countries.

In using the unitary tax approach, multinational companies would receive taxes where employees do the actual work rather than where the ledgers hide. Due to the fact that the economic activity that the tax havens are carrying out in countries would be more authentic, a greater deal of the global shares of the corporation’s profits would distribute to the countries, and then each country would have more reign to exercise their taxing rights and tax its shares of global profits at a more reasonable rate. A global shift to the unitary tax shift approach overall would benefit not just the U.S., but also low-income countries in the fight to eliminate global poverty.

Erasing tax havens is necessary as they are detrimental to the global system in that they rob governments of the opportunity to eliminate global poverty and socioeconomic inequality by depriving governments of needed public service resources such as health and education. Erasing tax havens is vital to eliminating global poverty, and global tax laws need to modify to benefit many, not just a few.

– Cydni Payton
Photo: Flickr

Soda Tax in Mexico

Type 2 diabetes recently became one of the leading causes of death in Mexico. The number of diabetes-related deaths will continue to rise. Furthermore, scientists have predicted that at least half of Mexico’s population will have diabetes by 2050. Conditions such as being overweight and obesity have strong links to the development of Type 2 diabetes. In response to the growing health concerns associated with obesity and diabetes, the soda tax in Mexico has been implemented to reduce liquid sugar consumption and promote healthier lifestyle choices.

Tax on Soda

Mexico has historically been a top consumer of sugar-sweetened beverages. In 2012, the average person consumed 176 liters per year. Mexico made the world’s top consumer of soda per capita.

The popularity of sugary drinks has come with negative consequences. As soda consumption rose, the number of people suffering from obesity and diabetes in Mexico also increased. While sugar-sweetened beverages were not the only drivers of the weight-related problems plaguing the country, they did receive the most attention from health officials.

In 2014, Mexico began taxing all sugar-sweetened drinks. The tax roughly increased the price of the sugary drinks by one peso per liter. The purpose behind the soda tax was twofold:

  1. Reduce the consumption of liquid sugar that contributed to high obesity and diabetes rates.
  2. Increase funding for public health-based programs to promote healthy lifestyle choices.

Mexico’s Struggle with Diabetes

The soda tax in Mexico was an important step in the country’s fight against diabetes. In 2018, a report found that nearly one-third of the Mexican population was living with diabetes. The most common form diagnosed was Type 2 diabetes, which causes blood glucose (sugar) levels to be higher than normal. The exact cause remains unclear, but obesity was strongly linked to the development of Type 2 diabetes.

Link Between Obesity and Diabetes

The World Health Organization (WHO) reported that a healthy diet includes the consumption of about 2,000 calories per day. The average Mexican adult consumes over 3,000 calories per day. Mexico has one of the highest obesity rates in the world. The number of Mexican adults suffering from obesity rose from 20.5 million in 2012 to 24.3 million in 2016.

Food insecurity and undernourishment were the leading causes of obesity, especially among the poor. The United Nations Food and Agriculture Organization (FAO) found that unreliable access to food contributed to multiple health conditions. In addition, much of the food produced in Mexico was high in carbs and fats. Mexican farmers favored crops that were cheap and easy to grow (like corn) instead of focusing on their nutritional value. Consequently, the average Mexican diet has higher carbs and fats than recommended.

The poor have been the most vulnerable to obesity. A study found that poor communities had obesity rates 145 percent greater than wealthy communities. The stress of food insecurity and undernourishment impair the poor from making the best food choices for their health.“When household resources for food become scarce, people choose less expensive foods that are often high in calories and low in nutrients,” explained the FAO.

Did the Soda Tax Work?

Diabetes has no cure. While medication is a big part of treatment, most doctors recommend a lifestyle change for diabetics looking to keep their blood glucose levels under control. The “Soda Tax” sought to help with the lifestyle change by saving people who avoided sugary drinks money.

Since 2014, the sales of sugar-sweetened beverages have dropped throughout Mexico. Sales dropped by 5.5 percent the first year. By the second year, sales were down by 9.7 percent. The sales of untaxed beverages increased by about 2 percent. However, the calorie intake of the average person has remained unchanged.

– Paola Nuñez
Photo: Flickr

Living Conditions in MonacoMonaco, a small sovereign principality on the French Mediterranean coastline, is famous for its exceptional beauty, mild climate, and wealth. France surrounds Monaco on three sides and the Mediterranean Sea surrounds the other. Monaco is just 10 miles from the northern border of Italy. Monte Carlo, the state’s main district, is a popular luxury tourist destination and home to high-profile cultural staples like the Formula One Monaco Grand Prix, the Hotel de Paris and the Casino de Monte-Carlo. The principality is the second smallest independent state in the world after the Vatican and roughly the size of New York City’s Central Park. Home to about 39,000 people, Monaco is one of the richest nations in the world.

 Top 10 Facts About Living Conditions in Monaco

  1. The principality is governed by a hereditary constitutional monarchy with Albert II of the Grimaldi family, the current Prince of Monaco, at the helm. The Grimaldi family has been in power since they took over the region in 1297 and exercised absolute control until the nation’s first constitution was drafted in 1911. They celebrated 700 years of rule in 1997. Monaco’s second constitution, drafted in 1962, outlines the power of the executive, legislative and judicial branches and reinforces a shift of power from the family onto the state.
  2. Monaco does not levy personal income, capital gains, property or wealth taxes on its residents. Its business taxation policies are relatively lenient. This has turned the city-state into a tax haven for the wealthy, incentivizing the world’s richest people to buy property and establish businesses in Monaco.
  3. Because Monaco’s tax policies attract the world’s richest, the per capita income in Monaco is among the highest in the world, estimated at about $161,000 per year. Monaco has the highest concentration of millionaires and billionaires in the world.
  4. Real estate in Monaco is the most expensive in the world. In 2016, property sold for an average of $45,360 per square meter. These prices are significantly greater than in Hong Kong ($42,840) and Tokyo ($39,100), both famous for their expensive real estate.
  5. Less than a quarter of Monaco’s 38,000 residents are citizens. The vast majority of people in Monaco are wealthy foreigners. Many Monaco natives are not wealthy and must rely on government subsidies in order to afford to remain in Monaco. It is nearly impossible for foreigners to become citizens, so government subsidies are tailor-made to support Monaco natives.
  6. The unemployment rate is estimated at 2 percent, one of the lowest in the world. The Prince of Monaco guarantees every resident of Monaco a job, and the most popular industries among residents are tourism, finance and insurance. The region is also a hot-spot for research, with many residents working in the research industry.
  7. Education is mandatory for every child in Monaco and is provided for free by the Department of Education. Monaco’s literacy rate stays consistent at 99 percent. About 70 percent of Monaco’s students attend a public institution, while the rest attend one of several private schools in the region.
  8. Every worker in Monaco pays into the public healthcare system, and as a result, every contributor is reimbursed for the majority of their medical costs. Plus, with about 581 doctors per 100,000 people, Monaco has one of the highest concentrations of doctors in the world. Abundant sources of funding and doctors make healthcare in Monaco excellent, reflected in Monaco’s average life expectancy of 89.5 years.
  9. Crime in Monaco is very rare, and Monaco’s police force, consisting of 515 people, makes it the largest police force per-capita and per-area in the world. Monaco is one of the safest places in Europe and earned the nickname of “the safest square mile in Europe.”
  10. Monaco has the lowest poverty rate in the world. By attracting the world’s richest people, the state effectively eradicated poverty.

Monaco’s paradisal and business-friendly reputation attracts money from all over the world, causing its economy and residents to prosper. As a result, the living conditions in Monaco are unparalleled, and poverty is nonexistent in the state. A mix of political stability, low unemployment, low crime, high-quality health care and government assistance programs maintain Monaco’s high standard of living. As long as these aspects of Monaco endure, the phenomenal living conditions in Monaco should persist.

Jillian Baxter
Photo: Flickr