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Oxfam calls for action on tax havens to reduce wealth inequality

As the global rich and powerful gathered for the World Economic Forum (WEF) annual meeting, Oxfam released a report which it claimed showed  62 people own as much as the poorest half of the world’s population.

An Economy for the 1%, shows that the wealth of the poorest half of the world’s population – 3.6 billion people – has fallen by a trillion dollars since 2010. This 41% drop has occurred despite the global population increasing by around 400 million people during that period. Meanwhile the wealth of the richest 62 has increased by more than half a trillion dollars to $1.76 trillion. Just nine of the ’62’ are women. Although the number of people living in extreme poverty halved between 1990 and 2010, the average annual income of the poorest 10 per cent has risen by less than $3-a-year in the past quarter of a century Oxfam said. That equates to an increase in individuals’ daily income of less than a single cent a year.

The humanitarian aid and anti-poverty charity said that the level of wealth inequality was a crisis and called on governments to crack down on offshore tax havens increasingly used by rich individuals and companies to avoid paying tax. This, Oxfam believes, means governments in poorer countries have lost out on tax revenues which are needed to tackle poverty and inequality.

Globally, Oxfam said, it is estimated that super-rich individuals have stashed a total of $7.6 trillion in offshore accounts. If tax were paid on the income that this wealth generates, an extra $190billion would be available to governments every year. As much as 30%  of all African financial wealth is estimated to be held offshore, costing an estimated $14billion in lost tax revenues every year. This is enough money to pay for healthcare for mothers and children that could save 4 million children’s lives a year and employ enough teachers to get every African child into school Oxfam said.

Nine out of 10 WEF corporate partners have a presence in at least one tax haven and it is estimated that tax dodging by multinational corporations costs developing countries at least $100billion every year Oxfam reported. Corporate investment in tax havens increased almost quadrupled between 2000 and 2014.

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. This particularly affects women, who make up the majority of low paid workers around the world.

By contrast, Oxfam said, the already wealthy have benefited from a rate of return on capital, for example via interest payments and dividends, that has been consistently higher than the rate of economic growth. This advantage has been compounded by the use of tax havens which Oxfam beleives are the most glaring example of how the rules of the economic game have been rewritten to supercharge wealth entrenchment.

What do you think?