COMMENT: H&M tax row highlights wider issue
Global retailer H&M has hit back at claims that its low tax payments in Bangladesh are "unethical", but the argument is likely to rumble on.
The Swedish chain generates hundreds of manufacturing jobs in Bangladesh through its orders with local suppliers, but has no legal requirement to pay corporation tax.
However, claims that H&M contributed only SEK585 (US$75.50) in taxes to the Asian country in 2008, albeit legally, only fuels a feeling in Bangladesh that the big brands are more take than give.
Indeed, separate unrelated but violent protests this week over minimum wages in the country show that low cost labour does not come without its problems.
While garment workers take to the street to demand better wages, factory owners are also being asked to supply cheaper and cheaper goods.
The problem was communicated to just-style at March's Prime Source Forum during an interview with Fazlul Hoque, president of the Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA).
"Unfortunately, the irony is that the buyers are pressurising us to increase the standard of labour, working conditions and the living wage while always trying to reduce the price," he said.
The issue of minimum wage is completely separate to corporation tax, of course, but both represent the state of play in the supply chain.
While retailers are all to happy to place large orders at low cost, they are often too quick to sweep arising issues under the carpet.
H&M paid SEK5.7bn in taxes last year, and is not cutting any corners here, nor is it the only retail chain to source clothes from Bangladesh.
Nevertheless, corporate responsibility is an issue that should be constantly reviewed, and Action Aid's observation adds much to the debate.
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