Despite promises, world leaders are failing to tackle inequality as the wealth of the richest 62 people jump by 44 per cent in five years to $1.76 trillion, owing the same as half of the world.
According to the report, An Economy for the 1%, the wealth of the poorest half of the world’s population has fallen by a trillion dollars since 2010, a drop of 41 percent. The drop has occurred in parallel with the increase of the global population by 400 million. Out of the current ‘62’, rulers of the world, 53 are men and nine are women.
Despite the promises of the United Nations and of the world leaders to tackle inequality, Oxfam’s prediction that the 1% would soon own more than the rest of us, actually came true in 2015 – a year earlier than expected.
Oxfam stressed that the era of tax havens must cease, as rich individuals and companies are using the offshore centers to avoid paying their fair share to society, even though they profit from the use of it. The fact that the governments do not have access to the much needed resources, contributes to poverty and inequality as states can’t increase welfare spending and public investments.
Winnie Byanyima, Oxfam International Executive Director said: “It is simply unacceptable that the poorest half of the world’s population owns no more than a few dozen super-rich people who could fit onto one bus.
World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action – the world has become a much more unequal place and the trend is accelerating. We cannot continue to allow hundreds of millions of people to go hungry while resources that could be used to help them are sucked up by those at the top.
I challenge the governments, companies and elites at Davos to play their part in ending the era of tax havens, which is fuelling economic inequality and preventing hundreds of millions of people lifting themselves out of poverty. Multinational companies and wealthy elites are playing by different rules to everyone else, refusing to pay the taxes that society needs to function. The fact that 188 of 201 leading companies have a presence in at least one tax haven shows it is time to act.”
Globally, it is estimated that a total of $7.6tr of individuals’ wealth sits offshore. If tax were paid on the income that this wealth generates, an extra $190 billion would be available to governments every year.
As much as 30 percent of all African financial wealth is estimated to be held offshore, costing an estimated $14 billion in lost tax revenues every year. This is enough money to pay for healthcare for mothers and children in Africa that could save 4 million children’s lives a year, and employ enough teachers to get every African child into school.
One of the other key trends behind rising inequality set out in Oxfam’s report is the falling share of national income going to workers in almost all developed and most developing countries and a widening gap between pay at the top and the bottom of the income scale. The majority of low paid workers around the world are women.
By contrast, the already wealthy have benefited from a rate of return on capital via interest payments, dividends, etc, that has been consistently higher than the rate of economic growth. This advantage has been compounded by the use of tax havens which are perhaps the most glaring example set out in the Oxfam report of how the rules of the economic game have been rewritten in a manner that has supercharged the ability of the rich and powerful to entrench their wealth.
Oxfam stressed that governments should also take action to ensure that work pays for those at the bottom as well as for those at the top – including moving minimum wage rates towards a living wage and tackling the pay gap between men and women.
Byanyima added: “The richest can no longer pretend their wealth benefits everyone – their extreme wealth in fact shows an ailing global economy. The recent explosion in the wealth of the super-rich has come at the expense of the majority and particularly the poorest people.”