As the world’s top business executives and political leaders gather in Davos, Switzerland for this year’s World Economic Forum, anti-poverty development organization, Oxfam, has revealed that inequality was at record levels. The organization has also called for a wealth tax to tackle the global malaise.
In its latest report titled “Public Good or Private Wealth”, Oxfam said the global economy was broken with extreme poverty, while huge rewards went to those at the very top. The annual wealth check released to mark the commencement of the WEF showed that 2018 was a year in which the rich had grown richer and the poor poorer.
The charity organization revealed that the widening gap was hindering the fight against poverty, adding that a wealth tax on the one percent richest would raise an estimated $418 billion a year – enough to educate every child who is not in school and provide healthcare that would prevent 3 million deaths.
There is also a growing concentration of the world’s wealth. Down from 43 people the year before, 2018 saw the 26 richest billionaires own as many assets as the 3.8 billion people who make up the poorest half of the planet’s population. The wealth of the world’s billionaires increased by $900 billion, or $2.5 billion a day, in the last year, while the wealth of the poorest half of humanity fell by 11 percent.
“Billionaires now have more wealth than ever before. Between 2017 and 2018, a new billionaire was created every two days,” the report says, adding that wealth was becoming even more concentrated.
The report also flagged tax evasion by the rich, saying the super-rich were hiding at least $7.6 trillion from the tax authorities, avoiding an estimated $200 billion in tax revenues.
“While millions of refugees are refused a safe haven, the richest can buy citizenship in any one of a number of countries offering minimal taxes and scrutiny of their wealth,” the report said.
Furthermore, the report accused governments of making inequality worse due to lack of investments in public services. It noted that about 10,000 people per day die for lack of healthcare and there were 262 million children not in school, often because their parents were unable to afford the fees, uniforms or textbooks.
Tax havens are fueling inequality
As regards wealth in Africa, Oxfam said 30 percent of private wealth may be held offshore, denying governments on the continent an estimated $15 billion in tax revenues.
“Multinational companies exploit loopholes in tax codes to shift profits to tax havens and to avoid taxes, costing developing countries an additional estimated $100 billion of lost corporate income tax,” it said, adding that the impact of inequality was devastating and 262 million children would not be allowed to go to school.
Dick Forslund, a senior economist at Cape Town-based Alternative Information and Development Centre, said illicit outflows by big corporations were hampering South Africa’s economic growth prospects.
“It is not only the government that gets hurt by companies avoiding tax, but it also hurts the wages of workers. Economic growth may not deal with poverty, but addressing structural inequality,” Forslund said.
Oxfam recommended that governments do more to fund high-quality, universal public services by tackling tax dodging and ensuring fairer taxation, particularly corporations and the richest individuals’ wealth, which it said were often under-taxed. It also demanded that countries provide universal free health care, education and public services that also work for women and girls in order to end inequality.
