Inequality

  • The widening gap between the world’s richest and poorest people is tearing societies apart. Too many still toil in extreme poverty. In contrast, wealth is increasingly concentrated in the hands of a few, who can use it to capture disproportionate power to shape the future. The widening gap between the richest and poorest is damaging economies and pushing more people into poverty. There are practical ways to close the gap.

Hard to Swallow: How Ireland could do more to tackle corporate tax avoidance

Photo caption: Oanh (27) is a dialysis patient who lives in Hanoi, Vietnam. Oanh had to leave her family home in rural Me Linh District to move to the city for the hospital treatment she needs three times a week. She can’t afford a kidney transplant and has campaigned with other dialysis patients for an increase in health cover. Photo: Adam Patterson/Oxfam

This week Oxfam Ireland released a new report entitled ‘Hard to Swallow: Facilitating tax avoidance by Big Pharma in Ireland’ which indicates that Ireland’s corporate tax rules are allowing four of the world’s largest pharmaceutical firms – Abbott, Johnson & Johnson, Merck & Co (MSD) and Pfizer – to avoid large amounts of tax by shifting profits to and through Ireland.

Based on available data, Oxfam found that Abbott paid zero tax on profits of €1.2 billion declared in Ireland in 2015, costing the Irish taxpayer an estimated €155 million that year alone. Johnson & Johnson recorded profits of €4.31 billion in Ireland in 2015 but only paid an effective tax rate of six percent, €250 million less than they should have paid at Ireland’s corporate tax rate of 12.5%. Added to the Abbott figure, that means just two of the four companies avoided €405 million in tax in just one year.

It is estimated that these four pharma giants have avoided paying annual taxes of €96.6/$112 million across the seven developing countries investigated in the report, a move which impacts on the delivery of essential services that can help end poverty and inequality.

Tax avoidance is not a victimless crime

Oxfam’s research demonstrates that corporate tax avoidance continues to drive inequality and hamper the fight against poverty. It reduces the funds available to poorer countries to invest in public services that enable communities to lift themselves out of poverty. This is particularly the case for girls and women, who make up the majority of people living in poverty – and who are more likely to rely on public services.

This is not a new phenomenon. Developing countries are estimated to lose around US$100 billion annually through corporate tax avoidance, which deprives them of vital funds for hospitals, schools and other essential services. For example, in 2017, 1,317 children died at a hospital in Gorakhpur in India. A leading cause of death there is acute encephalitis syndrome, a mosquito-borne disease that can be easily prevented with proper sanitation and hygiene, but not easily cured. According to the former Health Secretary of India, 95% of the deaths could have been prevented if India had a functioning health system.

Had the Indian government received the estimated €63.8 million the four US drug companies may have underpaid in taxes annually, it could have allocated these funds to fighting encephalitis and still have had enough money left to buy Japanese encephalitis vaccines and bed nets for every child born each year in the whole of India.

Ireland’s tax code has already been implicated in facilitating some of this revenue loss - in 2017 Google was ordered to pay taxes on €194 million of profit to the Indian government which were found to have been illegally booked in Ireland.

Last week the Financial Times reported that nine out of 10 Fortune 500 companies are being investigated for tax avoidance related to $23 billion of revenue. It is not unreasonable to suspect that Ireland’s corporate tax regime is involved in some of these cases.

More tax transparency needed

Ireland has received one of the highest international ratings on tax transparency from the OECD. However, what is termed ‘tax transparency’ by the OECD and the Irish Government refers to information exchanges between tax authorities. None of this information is published or made available to legislators, investors, journalists and civil society actors. ‘Tax transparency’ is the only form of transparency that doesn’t allow public access to information. 

In 2017 the European Parliament agreed a proposal for public country-by-country reporting, which would require multinational companies (MNCs) to disclose where they generate profit and where they pay tax. However, the Irish Government has not been supportive of this proposal despite an endorsement by Brian Hayes MEP who said:

“The measures agreed by the Parliament represent a major step forward for tax transparency. Europe is leading on this issue alone. Country-by-country reporting is coming whether multinationals like it or not and I believe tax information for large companies should be made public as long as it is fair and is in the public interestFine Gael is in favour of corporate tax transparency.”

The current lack of transparency impedes attempts to understand how countries’ tax regimes operate. Because the companies in the Hard to Swallow report reveal little about their subsidiaries’ finances, attempts to quantify their tax avoidance barely scratch the surface. We limited our inquiry to countries where we could find a critical mass of data, and for those countries we located data for just 358 out of 687 subsidiaries – 56 in seven developing countries, 218 in eight advanced economies, and 84 in low tax jurisdictions like Ireland. Oxfam cannot prove that the companies are engaged in profit shifting or tax avoidance – this would require access to the companies’ tax returns. However, increasing transparency, such as through public country-by-country reporting would provide relevant actors, especially in developing countries, with data to help review and, if necessary, reform aspects of the tax system being used purely for tax avoidance.

Ireland’s Corporate Tax Roadmap

Earlier this month the Department of Finance released ‘Ireland’s Corporate Tax Roadmap’ which outlines the existing and future measures the Irish Government plans to take to address corporate tax avoidance. While it will tackle some mechanisms used, it does not go far enough to address all of the tax dodging mechanisms employed by multinationals, including big pharma companies. Most worryingly, the plan contains few, if any, mechanisms to address corporate tax avoidance that impacts developing countries.

Oxfam’s Hard to Swallow report adds to the growing body of research that indicates that Ireland is still one of the world’s biggest conduits for tax avoidance. Berkeley academic Gabriel Zucman’s most recent research indicates that Ireland facilitates the largest level of profit-shifting by US MNCs.  

The Hard to Swallow report also corresponds with the EU’s recent assessment of Ireland’s economy as part of the EU’s Semester Review, which stated that “some indicators suggest that Ireland's corporate tax rules are used in aggressive tax planning structures”. This review found that royalties sent from Ireland were equivalent to 26 percent of Ireland’s GDP in 2015 – more royalties than were sent out of the rest of the EU combined, making Ireland the world’s top royalties’ provider. High levels of these payments’ economic activity indicate that the jurisdiction is facilitating tax avoidance.

Despite this evidence, the Irish Government continues to claim that Ireland’s corporate tax regime doesn’t harm developing countries. It bases this claim on the findings from a spillover analysis undertaken in 2015 which concluded that “the Irish tax system on its own can hardly lead to significant loss of tax revenue in developing countries”. One of the arguments for this is that the amount of financial flows from Ireland to developing countries is low.

However, this spillover analysis only looked at limited data, focusing on 13 countries over two years. This meant that only 4 percent of the available data on Irish overseas investment into developing countries – from 2009 to 2012 – was examined. It also didn’t look at indirect flows through third countries like Luxembourg or Bermuda. Moreover, not all the limited data analysed could be assessed due to secrecy laws. The analysis noted this flaw saying that “a substantial percentage of [foreign direct investment] is labelled “confidential (…)” or “unspecified (…)” and this may in part go to developing countries”. Finally, the analysis ignored assessments of capital gains related to the sale of cross-border investments. Instead it focussed on the taxation of income from cross-border investments and services in contrast to the IMF’s Fiscal Spillover Reports.

At the end of 2017, Christian Aid Ireland published two reports entitled Global Linkages and Impossible Structures critiquing the Irish spillover analysis and highlighting the many mechanisms still available under Irish tax law that facilitate corporate tax avoidance. 

Changes to be implemented before the end of 2018

So, what new mechanisms are outlined in Ireland’s Corporate Tax Roadmap to address corporate tax avoidance? Firstly, all of the items outlined in the roadmap are either compulsory under EU law (as per the Anti -Tax Avoidance Directive or ATAD) or have already been signed up to by Ireland. The details in the plan concern how and when Ireland will be implementing these existing commitments. Unfortunately, Ireland has chosen to implement the least effective of these tax avoidance mechanisms at the latest available date. Most worryingly, these proposals include little or no mechanisms to address corporate tax avoidance that negatively impacts developing countries.

Most of the plan will not be implemented immediately, with some items not due to come into force for five years; however, three items are planned to be introduced before the end of 2018.

The first is the ratification of the OECD’s Multi-Lateral Instrument (MLI) by the Dáil by the end of this month. The MLI is an attempt to provide common minimum standards for all existing and future Double Tax Agreements (DTA). A DTA is legal agreement between countries to determine the cross-border tax regulation and means of cooperation between the two jurisdictions. DTAs often revolve around which jurisdiction has the right to tax cross-border activities and at what rate.

The minimum standards set out in the MLI have been designed to close tax avoidance loopholes. Article 12 of the MLI relates to defining when an MNC has a taxable presence or permanent establishment (PE) in a jurisdiction. This article makes it harder for multinational companies to claim that they don’t have a permanent establishment/taxable presence in a third country if they use a third party to conclude contracts on the company’s behalf, an approach that can be used as a tax avoidance strategy. When Ireland signed the MLI in June 2017 it chose not to adopt Article 12, missing the opportunity to close this loophole. 

In its submission to the consultation process that informed Ireland’s Corporate Tax Roadmap, Oxfam recommended that Ireland should adopt article 12 of the MLI when it ratifies the MLI later this year. No reference or discussion of this is included in Ireland’s Corporate Tax Roadmap, despite the Minister of Finance’s commitment to review this issue following news reports about the continuance of this loophole.

The second item Ireland proposes to introduce are controlled foreign corporations (CFC) rules, which, if designed appropriately, can make it less attractive for a company to shift profits to avoid tax. CFC rules can also discourage shifting profits from subsidiaries in developing countries to tax havens for EU-headquartered companies. Ireland has chosen to implement a form of CFC rules that will do little to address corporate tax avoidance. They will assess whether artificial arrangements (arrangements set up for mere tax purposes and not in line with the economic reality) are being used to avoid paying tax – something that Ireland is already supposed to be doing under its current transfer pricing legislation. The problem with this is that although it looks at artificial arrangements, it is very hard for Revenue Authorities to prove whether a structure is artificial or not.

The final change that should be implemented before the end of 2018 relates to updating Ireland’s domestic transfer pricing legislation, especially related to non-trading income, including capital transactions. Although these changes are welcome, Oxfam does not feel that addressing profit-shifting out of Ireland alone is enough to truly tackle corporate tax avoidance. Oxfam has asked that ‘two-way’ transfer pricing legislation is needed to give Irish Revenue officials the power to investigate instances where profits are shifted from a high tax jurisdiction to Ireland, to avail of its low corporate income tax rate. This would allow officials to identify potential abuses which could lead to revenue losses in other countries, especially developing countries.  

The ‘Coffey Review stated that there are adequate measures in place to address this issue. The review asserted that if transfer mispricing occurs, a foreign tax authority may adjust the transfer prices charged or taken by a foreign affiliate resident in their territory and attribute a higher quantum of taxable profit to the affiliate. If the Irish Revenue agrees with this assessment, an adjustment can be made under protocols set out in relevant Double Taxation Agreements. However, not all tax authorities of developing countries have the capacity to undertake such audits and identify sophisticated tax avoidance strategies. The Coffey Review also asserted that there is a danger of double non-taxation if the other jurisdiction decides not to exercise its taxing rights. This concern can be easily addressed by inserting a protection clause in new legislation to ensure that a reduction in taxable income in Ireland will only happen when Revenue is satisfied that the income will be assessable in another jurisdiction.

There should be more consideration in Ireland’s Corporate Tax Roadmap of the more comprehensive mechanisms needed to address corporate tax avoidance in a digitalised and global economy. These mechanisms include taxing companies on their global profits and then apportioning tax revenue according to value creation and economic activity, the development of a global minimum effective tax rate and the implementation of public country-by-country reporting. Although the Irish Government recognises that additional reforms are required to take account of the highly digitalised global economy “to ensure that tax is paid by companies where value is actually created”, it does not support any role for developing countries in this process.

What Ireland needs to do

Besides draining money from essential services, tax dodging also negatively impacts the poor because it requires governments to raise a greater proportion of their revenue from other sources. Most developing countries raise two thirds or more of their tax revenue through consumption taxes, which eat up a larger proportion of income, the poorer you are.

Ireland has a well-earned reputation of acting fairly and being a champion of the rights of poorer countries. To ensure this reputation is maintained, it needs to do more to address corporate tax avoidance that impacts the world’s poorest people.

Ireland is calling on the Irish government to:

  • Support efforts at EU level to agree meaningful legislation on public Country by Country Reporting
  • Advocate at relevant global forums for a consensus to be reached on a global minimum effective tax rate
  • Address profit-shifting, including signing up to Article 12 of the OECD’S Multilateral Instrument.
  • Review and reform Ireland’s Double Taxation Treaties
  • Strengthen Ireland’s existing Exit Tax regime and subject all new tax incentives to rigorous economic and risk assessments
  • Contribute to a second generation of international tax reforms to address the use of highly mobile value, including IP and other intangible assets.
  • Ensure that developing countries participate in all discussion concerning corporate tax reform on an equal basis

Four big pharma companies depriving poor countries of almost €100 million through tax dodging

  • New report from Oxfam indicates Ireland’s corporate tax rules allow all four to shift profits to and through Ireland
  • Aid agency calls for greater transparency to end corporate tax dodging

The U.S. pharmaceutical company Abbott paid zero tax on profits of €1.2 billion declared in Ireland in 2015, costing the Irish taxpayer an estimated €155 million that year alone, according to new research based on available data from Oxfam Ireland. 

The report, Hard to Swallow: Facilitating tax avoidance by Big Pharma in Ireland, was published in parallel to Oxfam America’s wider report, Prescription for Poverty, which looks at the harmful tax practices of four of the world’s largest pharmaceutical companies - Abbott, Johnson & Johnson, Merck & Co (MSD) and Pfizer. All four operate in Ireland and Hard to Swallow indicates that Ireland’s corporate tax rules have allowed them to avoid large amounts of tax by shifting profits to and through Ireland.

Oxfam also determined that Johnson & Johnson recorded profits of €4.31 billion in Ireland in 2015 but only paid an effective tax rate of six percent, €250 million less than they should have paid at Ireland’s corporate tax rate of 12.5%. Added to the Abbott figure, that means just two of the four companies avoided €405 million in tax in just one year.

The aid agency warned that these companies appear to be depriving governments – including several developing countries – of revenue that could be spent on fighting poverty and vital services for the poorest such as public health care.

The report uncovers a trend that suggests these companies are recording very high levels of profit in countries like Ireland with low corporate tax rates, while recording much lower levels in the seven developing countries assessed in this report. For example, Johnson & Johnson’s Thai subsidiaries posted eight percent profit while its Irish subsidiaries posted 38 percent profit for the years 2013-15. During the same period, Abbott made only eight percent profit in Thailand, which has a tax rate of 20 percent, while earning 75 percent profit in Ireland. Nothing they are doing is illegal, they are simply taking advantage of corporate tax rules that allow them to transfer profits from poorer countries to lower their tax bill.

In the wake of numerous tax dodging scandals, including the recent Paradise Papers, these findings undermine the Irish government’s claims that it is implementing appropriate measures to tackle tax avoidance, which contributes to rising inequality and poverty.

Jim Clarken, Oxfam Ireland’s Chief Executive, said: “All four companies have long-standing operations in Ireland and employ a combined total of approximately 10,000 people. The shadow-side of their presence here is their ability to use Ireland as a means to avoid paying taxes on their global operations.

“Our research shows that corporate tax avoidance continues to drive inequality and acts as a barrier to ending poverty by fuelling its root causes. Tax avoidance by the four pharma companies we investigated has deprived the cash-strapped governments of the seven developing countries covered in this report of more than €96.6 million every year – money that could be used to provide quality healthcare and tackle issues like poor sanitation which still affects 2.3 billion people globally.     

“It’s an unacceptable irony that the companies that produce life-saving medicines are depriving governments of money that could be used to save lives. Governments must require all companies to publish financial information for every country where they do business, so it is clear if they are paying their fair share.”

The Irish Government recently outlined its plan to address corporate tax avoidance in the report Ireland’s Corporate Tax Roadmap. All of the items outlined in the roadmap are either compulsory under EU law or have already been signed up to by Ireland. While it will tackle some mechanisms used for corporate tax avoidance, it does not go far enough to address all of the tax dodging mechanisms employed by multinationals, including big pharma companies. Most worryingly, the plan contains few, if any, mechanisms to address corporate tax avoidance that impacts developing countries.

Among a number of recommendations in the report, Oxfam is calling for greater transparency to truly tackle corporate tax avoidance.

Clarken continued: “Because the four pharmaceutical companies we investigated are not required to make public where they make profit and pay taxes, our attempt to quantify their tax avoidance barely scratches the surface.

“However, increased transparency through public Country by Country Reporting, would provide decision-makers, investors, journalists and civil society actors, especially in developing countries, with data to help review and, if necessary, reform corporate tax avoidance practices.”

In order to ensure Ireland’s well-earned reputation of acting fairly and being a champion of the rights of poorer countries, Oxfam is calling on the Irish Government to:

  • Support efforts at EU level to agree meaningful legislation on public Country by Country Reporting
  • Advocate at relevant global forums for a consensus to be reached on a global minimum effective tax rate
  • Address profit-shifting, including signing up to Article 12 of the OECD’S Multilateral Instrument.
  • Review and reform Ireland’s Double Taxation Treaties
  • Strengthen Ireland’s existing Exit Tax regime and subject all new tax incentives to rigorous economic and risk assessments
  • Contribute to a second generation of international tax reforms to address the use of highly mobile value, including IP and other intangible assets.
  • Ensure that developing countries participate in all discussion concerning corporate tax reform on an equal basis

To read the recommendations in full, click here for the full report.

ENDS

CONTACT: For interviews, images or more information, contact: Alice Dawson-Lyons, Oxfam Ireland – alice.dawsonlyons@oxfam.org / +353 (0) 83 198 1869

 

Notes to the Editor:

  • To read Hard to Swallow: Facilitating tax avoidance by Big Pharma in Ireland in full, visit: click here.
  • The seven developing countries covered in Hard to Swallow are: Chile, Columbia, Ecuador, India, Pakistan, Peru and Thailand.
  • This Oxfam Ireland report focuses on four pharmaceutical companies’ practices in Ireland and is published in parallel to a wider report from Oxfam America, Prescription for Poverty: Drug companies as tax dodgers, price gougers and influence peddlers. To see data and analysis for other countries as well as the methodology document, see the Oxfam America report: https://www.oxfam.org/en/research/prescription-poverty
  • Oxfam’s methodology is explained in the report in more detail. We used publicly available data on the financial activities of the companies to gauge if their tax payments in a country were aligned with the level of economic activity. In the absence of full information, we used revenue and profits as a proxy for real economic activity. We multiplied the company’s revenues in a country by the global profit margin to estimate profits, assuming uniform profit margins worldwide. While we recognise that margins are inconsistent, we had to assume the opposite for the purposes of this analysis. We applied the country’s statutory tax rate to the estimated profits to estimate how much tax would have been owed if profits were not diverted. Finally, we subtracted actual tax paid in that country from estimated tax owed, to calculate the estimated shortfall. We also spoke to current and former executives from top ten pharmaceutical and accounting firms on condition of anonymity, as well as other tax experts. They described carefully designed corporate structures that systematically minimise the amount of profit that stays in developing countries. We also asked the companies to check and explain our findings and to provide evidence where they differ with our interpretation. We refer to their responses in our report.
  • For Ireland tax losses were calculated based on the difference between the tax the company paid in Ireland and the headline rate of 12.5%. This is the standard way of calculating such ‘tax expenditures’.
  • B-roll footage shows how chronic underfunding of India’s healthcare system has resulted in an encephalitis crisis in Utter Pradesh, India that claimed the lives of over a thousand children in 2017 and left many more permanently disabled. While pharmaceutical companies are not responsible for India’s failing health system, stopping corporate tax dodging is critical to ensuring governments have the resources they need to invest in public services. Pfizer, Merck & Co, Johnson & Johnson, and Abbott appear to have avoided an estimated $74 million a year in tax between 2013 and 2015. This money is more than enough to provide every child born in India during that period with bed nets which help prevent the spread of the disease. The B-roll and shot list is available here.
  • Merck & Co is also known as Merck Sharp & Dohme or MSD in some jurisdictions including Australia and Ireland.

**Please note new email address: alice.dawsonlyons@oxfam.org**

Five things I’ve learned being a humanitarian aid worker

This World Humanitarian Day, Iffat Tahmid Fatema, Oxfam public health worker, shares what it's like helping people in our Rohingya refugee response in Bangladesh.

I started working for Oxfam last year at the height of the emergency when Rohingya refugees were arriving in huge numbers every day. At that time, I was toiling in a lab at the Asian University for Women in Chittagong pursuing my Master's degree in Bio-Technology, but I knew I wanted to work with real people, face-to-face. What's happened to the Rohingya people really upset me. I had never seen people living with so little. It really hurt me.

Now I teach Rohingya refugees living in the camp in Cox's Bazar about health and hygiene, to help them keep well and to prevent a major outbreak of disease. We discuss the importance of cleanliness and personal hygiene like washing your hands with soap after going to the toilet and before eating. We work with volunteers from the Rohingya community, training them so they can teach other refugees and spread good hygiene messages far and wide. The Oxfam team has reached more than 266,000 people in the camps so far.

1. Know what motivates you

In this job you need drive, good communication skills, and initiative.

When it's extremely hot, or raining heavily, or you’re tired, you might not feel like spending another long day in the camps. But then you think of the refugees and how you are working for them - that motivates you to keep going.

 

2. You have to build trust

Humanitarian work is also about building trust. You have to be sensitive to local culture and traditions.

You also have to be able to talk to different groups of people in different ways, from children to older people and Imams, the religious leaders. And you need to be a good observer so you can try to understand how people think.

 

3. Speak their language

Sometimes the refugees can be uncomfortable with someone who is not like them, so it helps that I can speak a similar language. But the language is also the biggest challenge as the regional language, Chittagonian, is only about 70 per cent the same as Rohingya.

Oxfam has worked with Translators Against Borders to develop a new translation app in English, Bangla and Rohingya, including specific vocabulary about health and hygiene, so this will be a big help.

 

4. Be prepared to face challenges

Working in the monsoons has been extremely hard and can be dangerous. When there is a heavy downpour of rain, conditions in the camps become very bad, very quickly. You can sink into the mud and lose your boots. When you climb the dirt steps there is the possibility the whole thing will collapse.

5. Patience is a virtue

The most important thing I have learnt is to be polite and be patient - even though I might be repeating the same thing hundreds of times, such as how to wash your hands. I am very impatient by nature, but working in the camps I have learned how to control my frustrations.

The most satisfying part of my job has been hearing from refugees what a difference Oxfam’s support has made to them.

We run regular listening groups where the community can give us constructive feedback. Recently a grandfather told me: "We are happy that you come and you listen to us. Thank you for the work you do."

That made me feel very happy.

This entry posted on 18 August 2018 by Iffat Tahmid Fatema, humanitarian public health worker for Oxfam’s Rohingya refugee response in Bangladesh, as part of our World Humanitarian Day program.

All photos: Iffat Tahimd Fatema, humanitarian public health promoter for Oxfam, in the Rohingya refugee camps, Cox's Bazar, Bangladesh. Credit: Abbie Trayler-Smith/Oxfam

Take action now to help end tax dodging

 
Ask the Irish government to support real corporate tax transparency.
 
In order to beat poverty for good we need to change the rules that allow corporations to dodge paying their fair share of tax. 
 
Currently, the global tax system drives inequality by allowing some companies to legally avoid paying tax.  Meanwhile, it is the poor – who are landed with higher tax bills and inadequate public services – that pay the price. 
 
Over the past two years, with the support of people across the island of Ireland, we’ve been campaigning to increase tax transparency by introducing public Country by Country Reporting, or pCBCR in the EU. If pCBCR was implemented, corporations would have to publish where they make profits and pay taxes - and this would make it much easier to lift the lid on tax dodging in the EU. 
 
Right now, we need to remind our government to support pCBCR and real corporate tax transparency.
 
Will you help us?
 
Together, we want to make as much noise as possible – please join us by tweeting the Minister for Finance @Paschald and the Minister of State @PatBreen1 to let them know we are serious about fighting the inequality caused by tax dodging and beating poverty for good. 
 
 
Thank you so much for your support – you can read more about how to get involved in our fight against poverty and inequality here: https://www.oxfamireland.org/getinvolved

Gaza is dying in front of everybody

Tim Holmes, Oxfam Program Manager, reports back on his recent visit to Gaza and reflects on the challenges people living there face in their daily lives.

A powerful smell hit me as I entered Gaza a fortnight ago. Not the smell of burning tyres from the ongoing protests, or the tear gas that has been used in response, but the smell of raw sewage. As I walked the few hundred meters through the wire cage corridor from the Israeli border security across the ‘access restricted area’ to the Palestinian border control, I crossed over a small stream of sewage slowly oozing from the Gaza Strip, under the huge turreted border wall, into Israel.

Why is this happening?

Well, a bunch of reasons. Without sufficient electricity or fuel, sewage treatment plants cannot function. What is left of the sanitation infrastructure that wasn’t destroyed by the last Gaza war in 2014, was designed for far fewer people than are now living in this small enclave. Expansion, operation and maintenance is difficult when there are multiple and severe Israeli restrictions on goods, including spare parts, entering Gaza.

The financial resources available for authorities responsible for sanitation in Gaza are woefully inadequate.

If people only had to cope with the smell of sewage and a collapsing sanitation system, perhaps life in Gaza would still be bearable. However, many people I met didn’t even refer to the sewage problem – there were too many other challenges to talk about.

Water is a key issue

More than 96% of water from the coastal aquifer where Gaza gets most of its water is undrinkable due to salinity. To access clean water, people often have to pay private water truckers who distribute water from small desalination plants – this costs six times as much as the regular water supply.  Part of Oxfam’s work in Gaza involves providing safe water by rehabilitating damaged water systems, but the task is ongoing.

Electricity has been a problem in Gaza for many years, but now it is out for 20 hours a day. This could be dismissed as an inconvenience but just imagine the stress and frustration of having to live without lights, refrigeration, access to the internet, or elevators in apartment buildings, let alone the far more serious disruption to hospitals, clinics, schools and water and sanitation services.

I was struck that the streets were so much emptier than when I was last in Gaza five years ago. I was told that this was because those who have cars couldn’t afford fuel and anyway people didn’t have enough money to go out for shopping beyond the basics. The Economist has estimated that people in Gaza are 25 per cent poorer today than they were at the time of the Oslo Accords, 25 years ago. More than 80% of the two million people in Gaza are currently receiving humanitarian assistance.

Staggering unemployment

I spoke to parents whose children are recent university graduates but they are sitting around at home getting more and more frustrated. According to the World Bank, unemployment in Gaza is at 44% – for those below 29 years, it is at a staggering 60%.

Oxfam is working with local partners to help people have better access to livelihoods, and with local farmers and producers to improve the quality of their produce and help them get it to market to improve their incomes. I spoke to the owner of a dairy processing unit that Oxfam has supported as part of its work to improve the dairy sector across Gaza.

I was told that the years of occupation, wars and blockade, combined with a new low in the economic and humanitarian situation in recent months, has meant that this is ‘now the worst time in our history’.

The level of despair and the lack of hope in the future was also striking in many of the conversations I had, and was much more pronounced than on my previous visits. As a result, I wasn’t surprised to learn that United Nations medical staff have recently referred to an ‘epidemic of psycho-social conditions’ in Gaza.

End the blockade

The people I spoke to shared with me their anger that the world is doing nothing to help them. I was told that even when help does come it is only in the form of insufficient albeit needed humanitarian assistance, rather than a resolution to the conflict, the end to the protracted occupation, the end to the illegal blockade of Gaza and having their right to self-determination fulfilled which is what people in Gaza really want.

Human rights organisations in Gaza told me of their exasperation that the Government of Israel and other parties to the conflict are not held to account under international law by the international community.

People I spoke to explained that because of this apparent impunity and the lack of alternative options, and despite the large number of deaths and injuries, they were generally supportive of the current protests continuing.

Some specified that they would only support non-violent demonstrations. I was told that ‘people in Gaza are doing their best to survive’ but that, despite this, ‘Gaza is dying in front of everybody’.

Violence in Gaza: Civilians are not targets - Alaa Aldali's Story

Oxfam’s policy positions on Gaza in general and regarding the recent protests:

•The blockade – now in place for more than a decade – has devastated Gaza’s economy, left most people unable to leave Gaza, restricted people from essential services such as healthcare and education, and cut Palestinians off from each other. Israel must end the blockade on Gaza, which is collectively punishing an entire civilian population.

•There must be a long-term solution to the crisis. The international community needs to redouble efforts to achieve a just and lasting peace based on international law, that brings security and development to all Palestinians and Israelis.

•Oxfam condemns the deaths and injuries of unarmed Palestinian protesters in Gaza. Unarmed Palestinians have the right to make their voices heard and the right to freedom of assembly and expression. Israel must abide by its obligations under international law to protect life and exercise the utmost restraint in accordance with law-enforcement standards on the use of force.

◦According to OCHA, 104 Palestinians, including twelve children, have been killed by Israeli forces during the course of the Gaza demonstrations since March 30. As of May 14, the latest rounds of protests at Gaza border resulted in 60 fatalities (including 8 children) and 2,770 injuries as a result of live fire. The number of injuries since the beginning of the protests has been 12,600. Fifty-five per cent of these have required hospitalisation. One Israeli soldier was also lightly injured. This entry posted by Tim Holmes, Program Portfolio Manager at Oxfam GB, on 23 May 2018.

Photo: Destruction in Gaza. Oxfam and our partners’ humanitarian and development work helps around 350,000 people in Gaza impoverished by the Israeli blockade. Credit: Iyad al Baba/Oxfam

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