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Published on L-Arka.org:: Online (http://www.l-arka.org)

Fair Trade - Taxing the poor!

By Vince Caruana

The basic principles of social justice advocate that the millions of people in developing countries who are marginalised, excluded and alienated need be brought back into the mainstream of active citizens.

Every single person is entitled to the basics of food, shelter and other necessities and more. However it is not enough just for people to survive, but rather to flourish and feel and that they are flourishing. Where unjust inequalities exist, they should be reduced and thereafter eliminated. One tool to do so is improved market access for poor people. However rich countries often take a view that goes against the basic principles of social justice.

Export growth is not a guaranteed route to poverty reduction - in fact the benefits often bypass the poor and cause environmental degradation. But linked to domestic and international policies that extend opportunities to poor people, trade has the potential to act as a powerful catalyst for poverty reduction. In reality this does not happen because rich countries use protectionist policies to deny opportunities to poor countries. These facts say it all:

Developing countries exporting to rich ones face trade barriers four times higher than those faced by industrialised countries.

Shirts produced by Bangladeshi women enter the US market at a tax rate approximately 20 times higher than that imposed on goods imported from Britain.

Vietnam pays more in US customs duties than the Netherlands, despite accounting for a far smaller share of imports.

Rich countries impose higher taxes on processed goods than on raw materials.

It is calculated that eliminating import restrictions on textiles and garments alone could generate as many as 27million jobs in developing countries.

Taxation often follows a simple principle of social justice: the more you earn, the more you pay. The trade taxes of rich countries follow the exact opposite: the less you earn the more you pay. The fact that the highest taxes are imposed on the poorest countries can best be explained with the following example:

Trade taxes paid by Bangladesh when exporting to the US are 14 times higher than those paid by France; while the average French income is 14 times higher than that in Bangladesh.


Source URL:
http://www.l-arka.org/node/57