Sunday, 27 January 2013

Fair Trade Treasure

My last blog post was about corporate efforts to hide money and dodge tax.  We all know about the Amazons and the Starbucks but there is another avoidance strategy which is about how goods - or more accurately, how the services related to goods are located around the world.  Corporations brand, insure, distribute in house.  By so doing they can then charge themselves for these services which they offer to themselves.  Such 'charges' are made in offices located in 'high tax' countries which are then offset as costs.  When set against profits in a 'low tax' location, such as Luxembourg, this cynical and creative accountancy is yet another means by which companies get to avoid paying their way.

The only winner in this scenario is the corporation.  Some only pay as little as 6% tax through this form of transfer pricing (or mispricing, given that companies can charge themselves what they like for their services to themselves). The original growers or manufacturers get a tiny fraction of the loot and any country with a respectable tax rate, including our own, loses revenue.  The trillions lost through corporate robbery makes current austerity measures a joke. 

So if anyone asks you why you like to buy fair trade you can tell them you are putting money directly into the hands of countries and the communities therein, enabling a fair day's pay for a fair day's work.  Fair traders in this country also pay their taxes and contribute to the social systems and infrastructure that we all benefit from.  Small steps, perhaps, but ones well worth taking. 

If you want to see what fair trade can offer, why not visit the Radish Fair Trading Post?

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