Fair taxes, fighting inequality essential for Peru

By Oxfam
An indigenous farmer walks in the highlands in northern Peru, an area where foreign companies have requested concessions to mine for copper. Photo by David Stubbs/Oxfam America

As Peru’s economy slows, Oxfam recommends policies that protect the environment, and support small-scale farmers and others vulnerable to falling into poverty.

Dropping prices of oil and minerals make new policies to fight poverty and address growing economic inequality essential for Peru as it chooses its next president on April 11. Oxfam made specific recommendations for candidates and policy makers to prioritize the fight against inequality in a report called “Agenda against inequality: five critical issues to close the gaps.”

"The rapid economic growth experienced by Peru between 2004 and 2013, with average rates of six percent, supported mainly by the high prices of minerals, is over…” Oxfam stated in a press release about the report, which it presented to journalists in a press conference in Lima on February 10th. It recommends that political candidates and policy makers prioritize investments in social spending to ensure the most economically vulnerable are not abandoned by the state.

Armando Mendoza presents Oxfam's report on inequality to journalists in Lima. Oxfam

The report says that cuts in the current budget are eliminating benefits for 50,000 people. “As of today, 40 percent of the population is vulnerable to poverty,” says Armando Mendoza, an economist working with Oxfam. “An adverse event such as illness or job loss could lead them to poverty.” The report goes on to recommend progressive tax policies that both reduce tax evasion as well as lower regressive taxes on consumption that are unfairly shouldered by those with the fewest resources. The goal of these policies is to reduce inequality, which has seen the wealthiest in Peru gain the most from the recent and short-lived economic boom.

People’s environmental rights threatened

Oxfam is also urging the government to reverse the trend of weakening environmental protection laws and institutions, and strengthen commitment to the free, prior, and informed consultation about oil, gas, and mining projects that will affect local communities.

“We have the right to live in a healthy environment," says Aurelio Chino, the leader of the Quechua Indigenous Federation of Pastaza (known in Peru by its Spanish acronym FEDIQUEP), who lives in the northern department of Loreto. This areas has been  affected by 40 years of oil industry activities resulting in pollution and chronic health problems for indigenous people there. Chino says local indigenous people were not properly consulted before oil companies started operating on their ancestral lands.

The current price drops for oil and minerals represent an opportunity to “rethink and redefine the state’s relationship with people and the ‘extractive industries’,” says Oxfam’s Mendoza. Oxfam and its development partners in Peru are also calling for more investment in environmental monitoring and remediation of polluted sites. Oxfam’s report also recommends greater respect for the rights of indigenous people, particularly in regards to prior consultation when establishing mining and oil operations.

The report goes on to make recommendations for the improvement of labor standards and for the increased investment in rural development, in order to help small-scale family farmers with access to credit, training, and communal land titling. Oxfam is also calling on citizens to push the presidential candidates to commit to policies that will protect the environment and respect the rights of indigenous people.

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