Comment: Global tax system can cut inequality

Snowmen representing countries around the world form part of the Action 2015 exhibition in Davos, Switzerland.
Picture: PA/Keystone — Snowmen representing countries around the world form part of the Action 2015 exhibition in Davos, Switzerland. Picture: PA/Keystone

This week, the World Economic Forum has been taking place in Davos in Switzerland.

Most people associate this gathering with the globe’s billionaires, wealthy and powerful corporations and financial institutions – it is an event that is synonymous with the global elite.

So it might be a surprise to learn this year’s forum is co-chaired by Oxfam International’s executive director Winnie Byanyima.

For us it is the ideal opportunity to present many of the richest and most powerful people on the planet with the stark and undeniable facts about extreme and growing inequality.

The forum is not a decision-making body and has no global power, but many of its attendees do and, as yet, they have done little or nothing to deal with this growing global risk.

Our aim is to ensure those attending it understand there is nothing inevitable about inequality and, beyond that, the need to turn their stated concern about inequality into action to tackle it.

Just 12 months ago, to coincide with last year’s forum, Oxfam launched research showing the richest 85 people on the planet own the same wealth as the poorest half of the global population put together.

That astonishing comparison grabbed headlines around the world.

Just a year on, new updated analysis shows inequality has become yet more extreme. Now, just 80 people own the same wealth as 3.5 billion – that’s half of the world’s population – and down from 388 just five years ago.

The trend is clear and, at this rate, the richest 1 per cent will own more wealth than the rest of the global population combined by 2016.

Such extreme inequality matters, as it threatens to set back the fight against poverty by decades.

The past 20 years have seen real progress in efforts to end extreme poverty and, across the world, millions more people have access to healthcare and education.

Some 150 million fewer men and women are going hungry.

But inequality threatens to undermine, and in some cases reverse, this progress.

We must not allow this to happen.

It is clear that, alongside climate change, extreme inequality is the defining challenge of our age.

In both of these areas, 2015 is a landmark year.

On climate change, the outcome of negotiations in Paris at the end of this year will reveal whether – after years of dithering – the world will finally match action to the scale of the challenge we face.

But we must also make it the year in which world leaders unite in a common mission to address the extreme gap between the rich and poor.

As Oxfam pushes to make this a reality, we’re pleased that the World Economic Forum has consistently recognised the threat inequality poses to prosperity and security around the world.

Inequality has also been highlighted as a major problem by everyone from Pope Francis to President Obama, billionaire Warren Buffett and Christine Lagarde, head of the International Monetary Fund.

But world leaders must now challenge the vested interests standing in the way of progress.

Having recognised the problem, those meeting in Davos must urgently act by clamping down on tax dodging, ensuring people are paid decent wages and investing in high-quality public services.

On tax, the UK should lead by example by closing tax loopholes that mean billions of pounds are lost each year through legal corporate tax dodging.

But global corporate tax rules must also be changed so they no longer unfairly benefit the already wealthy while depriving rich and poor countries alike of the resources they need.

It is clear that inequality rises when tax rules are unfair.

When corporations pay less or no tax, increased profits accrue to those at the top, leaving everyone else – in rich and poor countries alike – to fill the gaps. Not only that, but if wealthy individuals and corporations do not pay the tax they should, governments are deprived of the vital revenues they need to invest in public services like health and education that can help to fight poverty and reduce inequality.

So as well as seeking action here in the UK, Oxfam is calling for a World Tax Summit to be held later this year and for all countries, rich and poor alike, to be invited to participate.

Such a forum can be the beginning of a process which will deliver a global tax system that works for the many and not the few. It is a message few in Davos may wish to hear but, as co-chair, it is one we will ensure is heard.

• Jamie Livingstone is Head of Oxfam Scotland

www.oxfam.org.uk