When the rich get richer it doesn’t ‘trickle down’
by UNRISD, ICRICT, Oxfam, OHCHR, agencies
12:15pm 11th Sep, 2022
Increase taxation on those who fail to pay their fair share: the multinationals and the super-rich, report by the Independent Commission for the Reform of International Corporate Taxation (ICRICT)
The battle against the global pandemic, and the war in Ukraine, have left the world on the threshold of recession, with skyrocketing poverty and inequality.
Once again, the effects of the cost-of-living crisis, growth slowdown and high debt levels are disproportionately falling on the most vulnerable households. At the same time, most countries need to face urgently the exacerbated climate crisis, as it is clearly an existential issue.
The question is now: who should foot the bill? The Independent Commission for the Reform of International Corporate Taxation (ICRICT) is launching a new report, “An Emergency tax plan to confront the inflation crisis” calling on governments to implement emergency tax measures, especially on companies profiting from the crisis, to avoid economic downturns and counter unacceptable levels of hunger, extreme poverty, and inequality.
While inflation ravages the whole planet, some companies are on record profits. Taxing corporate super profits, and especially windfall profits driven by the pandemic and the war, could help social cohesion and generate additional revenues that could partially mitigate the adverse effect of inflation on the poorest.
What was supposed to be “the historic deal”, led by the G20 and OECD, already lacked ambition and fell short of both requirement and possibility. But shockingly, even this limited effort is now blocked in a political impasse at the rich country level (US and EU).
ICRICT strongly encourages countries not to wait. Rather they should move forward and consider their own alternative measures, formulated where possible in a coordinated manner, to be actively implemented without any delay.
These measures will both deliver desperately needed resources now and create the necessary pressure to force change towards a genuinely fair international tax architecture, which will require multilateral discussions extending well beyond the current process.
Globally, tax evasion diverts 40% of multinationals' foreign profits to tax havens, according to ICRICT member Gabriel Zucman. The IMF's Fiscal Affairs Department estimates that total annual corporate tax losses associated with profit shifting are more than $600 billion, including $400 billion for OECD member states and about $200 billion for developing countries per year.
Since 2000, average statutory tax rates have declined in OECD member states and in most jurisdictions. A global effective minimum tax on corporate profits of 15% would generate only about $150 billion in additional tax revenue, while the 25% rate advocated by ICRICT could provide the world with over $500 billion in additional revenue.
Developing countries are relatively more dependent on corporate taxes as a source of revenue. Corporate taxes account for 15% of total tax revenues in Africa and Latin America, compared to 9 percent in OECD countries. A recent UN study shows that Africa loses nearly $89 billion a year in illicit financial flows, equivalent to 3.7% of the continent's GDP, which is more than it receives in development aid.
* The ranks of the global “ultra high net worth” (UHNW) individuals swelled by 46,000 last year to a record 218,200 as the world’s richest people benefited from “almost an explosion of wealth” during the recovery from the pandemic.
The number of UHNW people – those with assets of more than $50m – jumped in 2021 as the super-rich benefited from soaring house prices and booming stock markets, according to the report by investment bank Credit Suisse. The number of people in the UHNW bracket has increased by more than 50% over the past two years.
The richest 1% of the global population increased their share of all the world’s wealth for a second year running to 46%, up from 44% in 2020.
The huge increase in wealth of the richest 0.00004% of the world’s adult population comes as billions of low- and middle-income people – many of whom saw their savings wiped out during the pandemic – struggle to cope with soaring food and energy prices.
Towards a global fiscal architecture using a human rights lens - Report by Independent Expert on Foreign Debt and Human Rights, Ms. Attiya Waris.
In this present report, the Independent Expert focuses on exploring more effective and fair mechanisms to use public resources to guarantee human rights for all by tackling the uncontrolled growth of the wealth of a few, which is deepening inequalities. For all Governments, losses in taxable revenue through illicit financial flows reduce the available pool of resources essential for investing in social policies and public services.
Governments cannot tackle those issues alone, making international cooperation and assistance a cornerstone of the present report. A multilateral, inclusive and democratic fiscal architecture is crucial to addressing global tax avoidance and evasion.
In the present report, the Independent Expert addresses the issue of international tax governance through the creation and development of a global United Nations-led tax convention and a global tax body using a human rights lens.
http://www.ohchr.org/en/documents/thematic-reports/a77169-towards-global-fiscal-architecture-using-human-rights-lens-report http://taxjustice.net/press/un-secretary-general-signals-support-for-un-tax-convention/ http://taxjustice.net/press/un-tax-convention-proposed-at-general-assembly/ http://globaltaxjustice.org/news/civil-society-organisations-support-the-g77-and-china-proposal-on-un-intergovernmental-tax-body-and-the-africa-groups-proposal-on-a-un-tax-convention/ http://www.icij.org/investigations/paradise-papers/global-tax-proposal-gains-ground-at-un-as-oecd-plan-falters/ http://taxjustice.net/2022/09/28/to-protect-childrens-right-to-education-governments-must-fight-tax-abuse/ http://www.cesr.org/why-tax-justice-is-critical-to-the-rights-of-persons-with-disabilities/
* More than four billion people live without any social protection to protect them from crisis, reports the UN International Labour Organization. Civil Society agencies from across the world Call for a Global Fund for Social Protection to build a better future:
http://www.socialprotectionfloorscoalition.org/civil-society-call/ http://www.srpoverty.org/thematic-reports/ http://www.ilo.org/global/research/global-reports/world-social-security-report/2020-22/lang--en/index.htm http://www.hrw.org/news/2022/04/14/imf/world-bank-targeted-safety-net-programs-fall-short-rights-protection
85% of the world’s population will live in the grip of stringent austerity measures by next year.
A new report End Austerity: A global report on budget cuts and harmful social reforms shows that 85 per cent of the world’s population will live in the grip of austerity measures by 2023. This trend is likely to continue until at least 2025, when 75 per cent of the global population (129 countries) could still be living under these conditions.
Austerity measures include scaling down social protection programs for women, children, the elderly and other vulnerable people, leaving only a small safety net for a fraction of the poor; cutting or capping the wages and number of teachers, health and local civil servants and eliminating subsidies; privatising or commercialising public services such as energy, water and public transport; and reducing pensions and workers’ rights.
Civil society organisations from across the world are launching an #EndAusterity campaign today to fight back against the wave of austerity that is sweeping across the world, supercharging inequality and compounding the effects of the cost-of-living crisis and climate breakdown.
Isabel Ortiz, Director of the Global Social Justice Program at the Initiative for Policy Dialogue, and co-author of the report, said: “Decisions on budget cuts affect the lives of millions of people and should not be taken behind closed doors by a few technocrats at a Ministry of Finance, with the support of the IMF. Policies must instead be agreed transparently in a national social dialogue, negotiating with trade unions, employer federations and civil society organisations. Austerity cuts are not inevitable, in fact our report presents nine financing alternatives that are available, even to the poorest countries.”
* Report End Austerity: A global report on budget cuts and harmful social reforms: http://bit.ly/3UMRQvz http://policydialogue.org/publications/working-papers/end-austerity-a-global-report-on-budget-cuts-and-harmful-social-reforms-in-2022-25/
The cost-of-living crisis, Kate Pickett writes, follows a familiar path of hugely unequal burdens. It’s time to change course.
I’m feeling outraged, with a strong sense of deja-vu. From my vantage point in the United Kingdom—where inequality and social injustice are in particularly sharp focus—we’re on the brink of yet another social and economic crisis. Even more so than in the rest of Europe, energy prices and the cost of living are rocketing.
Yet what is happening at the top? What are our leaders doing? Why are some people, yet again, making eye-watering financial gains while others face destitution and a real fear of being cold and hungry this winter?
The image springs to mind of Nero fiddling while Rome burns—a depraved, corrupt and wildly unpopular emperor, blithely playing music while the populace suffers and failing through inertia to provide any leadership in a crisis.
On a wider canvas, it encapsulates the inadequacies of so many political leaders over recent years, from the global financial crisis to the pandemic, in the face of the climate emergency and now the spiralling cost of living.
As a child, I thought the ‘fiddling’ Nero was up to related to the other English meaning of the word—obtaining money dishonestly, by embezzlement or corruption. I mistakenly assumed he had raided the imperial treasury and made off with his ill-gotten gold. It turns out, however, that my infant misconception makes for exactly the right metaphor of how business figures and investors have profited from the hardship of others. And that provokes even more moral outrage than the passive failures of hapless political leaders.
Look at who suffered from the global financial crisis. It wasn’t the rich, who had caused the problem through unscrupulous financial practices. It was the rest of us who paid the price, as average real incomes declined—and the poorest who suffered the most, with the lowest-paid workers seeing the steepest falls in wages.
Meanwhile, the pay of top chief executives shot up. In the years following the crash, the world’s richest 1 per cent increased their wealth until they owned more than the bottom half of the world’s entire population.
Top investors made billions by buying up shares in failing banks and betting against housing markets that were foreclosing on the mortgages of the poor, realising massive gains during recovery. The 19th-century British financier Nathan Rothschild is credited with the invocation that ‘the time to buy is when there’s blood in the streets’—a horrendously cynical phrase which at least recognises the deep immorality involved.
It has been just the same during the pandemic, with the poorest the most likely to be exposed to the coronavirus, to be infected, to become really ill and to die. Death rates have been twice as high in the most deprived areas of the UK as in the most affluent neighbourhoods, a pattern repeated across the world.
Poor workers couldn’t afford to protect themselves from exposure, small businesses went to the wall and household precarity and financial insecurity increased. At the same time, the rich were not only able to keep themselves safe from infection but were also accumulating wealth—including in Britain from government procurement schemes set up under emergency regulations with lowered scrutiny for corruption. The world’s billionaires saw their wealth increase by nearly 70 per cent during the pandemic.
During this summer of severe drought across Europe, it became clear that huge remuneration packages and dividends had enriched the chief executives and shareholders of the UK’s water companies—previously treated as a public good, water was privatised when Margaret Thatcher was in power. This despite their abysmal record on tackling leaks and pollution and investing in new reservoirs and infrastructure.
Although most of the firms were failing to meet sewage pollution targets, bonuses paid to water company executives rose by 20 per cent in 2021—on average they received extra payments of well over €100,000. Some further rake it in from second jobs on the boards of other companies, where they set the pay and bonuses of other top executives.
We know who is suffering most from rising prices and interest rates in this cost-of-living crisis: those on low incomes, on benefits, families with children, especially lone parents and everyone living in deprived areas. Already we can read stories in Britain of people eating cold food because they cannot afford the energy needed to run their ovens and microwaves, of key workers in the health service calling in sick because they cannot afford petrol to get to work and of people planning to turn off their heating in the winter.
Yet oil and gas companies have made huge profits since the energy crisis began and their chief executives continue to be paid millions—some many millions. Throughout each of these social and economic disasters, it hasn’t simply been a matter of the poor getting poorer and the rich getting somewhat richer. In these big existential crises, the rich have got a lot richer.
If it’s such a familiar pattern, why do we tolerate it? We’ve surely known for long enough that when the rich get richer it doesn’t ‘trickle down’. I’m fond of a cartoon which shows two skeletons sitting in a boat, labelled ’99 per cent’, on the seabed. One skeleton says: ‘They say a rising tide lifts all boats.’ The other replies: ‘Do they say when?’
There are many policy options: imposing windfall taxes on profits, nationalising energy and water companies, linking bonus payments to improvements in service and sustainability, and more. But these are a bandage on a gaping wound. The problems are persistent across time and across sectors.
What we really need is a root-and-branch reshaping of our economy, away from neoliberal, extractive capitalism and towards a system built on the ‘new economics’—more communitarian, egalitarian and democratic, with sustainability and wellbeing as its goals.
This month, 50 years on from its ground-breaking Limits to Growth, the Club of Rome is issuing Earth4All, the result of a two-year research programme by a collective of economic thinkers, scientists and activists of which I have been part. It calls for five extraordinary turnarounds—of poverty, inequality, gender empowerment, food and energy—to create a better future.
Check out Earth4All’s website to find resources and learn about actions to support the changes we need to secure a safe, secure and prosperous future for all on a healthy planet. http://bit.ly/3d9gjdF
* Kate Pickett is professor of epidemiology, deputy director of the Centre for Future Health and associate director of the Leverhulme Centre for Anthropocene Biodiversity, at the University of York.
‘Polluters must pay’: UN chief calls for windfall tax on fossil fuel companies, by UN News, agencies.
Countries should impose windfall taxes on fossil fuel companies and divert the money to vulnerable nations suffering worsening losses from the climate crisis, the United Nations secretary general has urged.
Antonio Guterres said that “polluters must pay” for the escalating damage caused by heatwaves, floods, drought and other climate impacts, and demanded that it was “high time to put fossil fuel producers, investors and enablers on notice”.
“Today, I am calling on all developed economies to tax the windfall profits of fossil fuel companies,” Guterres said in a speech to the UN general assembly. “Those funds should be redirected in two ways – to countries suffering loss and damage caused by the climate crisis and to people struggling with rising food and energy prices.”
Guterres’s appeal came in his most urgent, and bleakest, speech to date on the state of the planet, and the will of governments to change course. His first words were: “Our world is in big trouble.”
“Let’s have no illusions. We are in rough seas. A winter of global discontent is on the horizon, a cost-of-living crisis is raging, trust is crumbling, inequalities are exploding and our planet is burning,” he told the assembly. “We have a duty to act and yet we are gridlocked in colossal global dysfunction. The international community is not ready or willing to tackle the big dramatic challenges of our age.”
The lacerating speech, delivered at the UN headquarters in New York, echoes calls from activists, and the European Union, to tax major oil and gas firms currently enjoying record profits in the wake of Russia’s invasion of Ukraine. In July, Exxon announced it had made a record quarterly profit of $17.8bn, while Chevron unveiled its own three-month record profit, of $11.6bn. BP, meanwhile, made a $8.5bn profit in the same period.
Under Guterres’s proposal, revenue from the taxes would flow to predominantly developing countries suffering “loss and damage” from global heating, to be invested in early warning systems, mopping up from disasters and other initiatives to build resilience. Vulnerable countries are poised to leverage the UN general assembly week to ask rich nations for a “climate-related and justice-based” global tax to pay for loss and damage.
Guterres has previously accused governments of having an “addiction” to fossil fuels and has called new investments in oil, coal and gas “moral and economic madness”.
But his speech on Tuesday was particularly pointed, delivered on the dais of the UN general assembly and following the secretary general’s recent visit to Pakistan, where floods from what he called “a monsoon on steroids” have submerged a third of the country and displaced millions of people.
“Our planet is burning,” Guterres said, calling on world leaders to to end their “suicidal war against nature”.
“The climate crisis is the defining issue of our time,” he added. “It must be the first priority of every government and multilateral organization. And yet climate action is being put on the back burner – despite overwhelming public support around the world.”
“We have a rendezvous with climate disaster … The hottest summers of today may be the coolest summers of tomorrow. Once-in-a-lifetime climate shocks may soon become once-a-year events. And with every climate disaster, we know that women and girls are the most affected. The climate crisis is a case study in moral and economic injustice.”
Governments must stage an “intervention” to break their addiction to fossil fuels, Guterres said, by targeting not only the extractive companies themselves but the entire infrastructure of businesses that support them.
“That includes the banks, private equity, asset managers and other financial institutions that continue to invest and underwrite carbon pollution,” said the secretary general.
“And it includes the massive public relations machine raking in billions to shield the fossil fuel industry from scrutiny. Just as they did for the tobacco industry decades before, lobbyists and spin doctors have spewed harmful misinformation. Fossil fuel interests need to spend less time averting a PR disaster – and more time averting a planetary one.”
Guterres said it was “high time to move beyond endless discussions” and deliver finance for vulnerable countries and for wealthy nations to double adaption funding by 2025, as they promised to do at UN climate talks in Scotland last year. A further round of talks, known as Cop27, will take place in Egypt in November, in which loss and damage is set to be a central issue.
Although governments have agreed to restrain global heating to 1.5C above pre-industrial times, almost all countries are lagging in their efforts to cut greenhouse gas emissions quickly enough to avoid this level of heating and therefore avert catastrophic climate impacts.
Emissions have already rebounded to pre-pandemic levels and an analysis this week showed there are plenty of known fossil fuel reserves in the world still left to burn – enough to unleash 3.5tn tons of greenhouse gases, which would smash the carbon budget before we get to 1.5C seven times over.
http://news.un.org/en/story/2022/09/1127071 http://www.ohchr.org/en/press-releases/2022/10/climate-change-greatest-threat-world-has-ever-faced-un-expert-warns http://www.oxfam.org/en/press-releases/extreme-hunger-has-more-doubled-10-worlds-worst-climate-hotspots-over-past-six-years http://www.srpoverty.org/2022/10/17/press-release-increase-benefits-and-wages-in-line-with-inflation-or-lives-will-be-lost-un-poverty-expert/ http://unctad.org/press-material/unctad-warns-policy-induced-global-recession-inadequate-financial-support-leaves http://www.gi-escr.org/latest-news/gi-escr-calls-on-the-imf-and-the-world-bank-to-support-public-services http://www.gi-escr.org/s/our-future-is-public-FINAL.pdf
UNRISD 2022 Flagship Report: Crises of Inequality: Shifting Power for a New Eco-Social Contract.
There is perhaps no stronger evidence of the pressing need to redesign our global system than the fact that a global health crisis doubled the wealth of the 10 richest men in the world while sending upwards of 120 million people into extreme poverty.
This UNRISD Flagship Report shows how inequalities and crises reinforce and compound each other, leading to extreme disparity, vulnerability and unsustainability. It argues that this is not the result of a broken system but one in which inequality and injustice are built in by design. The social contract has broken down to the great detriment of people and planet.
The report associates the multiple crises and increasing inequalities we are facing with policy choices promoted during the age of neoliberal hyperglobalization. It unpacks the implications for sustainable development and for disadvantaged social groups through the lenses of intersectionality and power.
To address inequality, break the cycle of multiple and interlocking crises, and work towards a more equal, just and sustainable future, the report proposes the creation of a new eco-social contract and a policy approach based on alternative economies, transformative social policies, and reimagined multilateralism and strengthened solidarities.
http://www.unrisd.org/en/library/publications/crises-of-inequality http://cdn.unrisd.org/assets/library/reports/preview-unrisd-flagship-report-2022.pdf http://www.ohchr.org/en/statements/2021/10/joint-statement-independent-united-nations-human-rights-experts-warning-threat
The world’s ten richest men own more wealth than 3 billion people, by Gabriela Bucher - Executive Director of Oxfam International
As the cost of essential goods rises faster than it has in decades, billionaires in the food and energy sectors are increasing their fortunes by $1 billion every two days.
For every new billionaire created during the pandemic — one every 30 hours — nearly a million people could be pushed into extreme poverty in 2022 at nearly the same rate, reveals a new Oxfam brief today. “Profiting from Pain” is published as the World Economic Forum — the exclusive get-together of the global elite in Davos — takes place for the first time face-to-face since COVID-19, a period during which billionaires have enjoyed a huge boost to their fortunes.
“Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic and now the steep increases in food and energy prices have, simply put, been a bonanza for them. Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive,” said Gabriela Bucher, Executive Director of Oxfam International.
The brief shows that 573 people became new billionaires during the pandemic, at the rate of one every 30 hours. We expect this year that 263 million more people will crash into extreme poverty, at a rate of a million people every 33 hours.
Billionaires’ wealth has risen more in the first 24 months of COVID-19 than in 23 years combined. The total wealth of the world’s billionaires is now equivalent to 13.9 percent of global GDP. This is a three-fold increase (up from 4.4 percent) in 2000.
“Billionaires’ fortunes have not increased because they are now smarter or working harder. Workers are working harder, for less pay and in worse conditions. The super-rich have rigged the system with impunity for decades and they are now reaping the benefits. They have seized a shocking amount of the world’s wealth as a result of privatization and monopolies, gutting regulation and workers’ rights while stashing their cash in tax havens — all with the complicity of governments,” said Bucher.
“Meanwhile, millions of others are skipping meals, turning off the heating, falling behind on bills and wondering what they can possibly do next to survive. Across East Africa, one person is likely dying every minute from hunger. This grotesque inequality is breaking the bonds that hold us together as humanity. It is divisive, corrosive and dangerous. This is inequality that literally kills.”
Oxfam’s new research also reveals that corporations in the energy, food and pharmaceutical sectors — where monopolies are especially common — are posting record-high profits, even as wages have barely budged and workers struggle with decades-high prices amid COVID-19. The fortunes of food and energy billionaires have risen by $453 billion in the last two years, equivalent to $1 billion every two days. Five of the largest energy companies (BP, Shell, TotalEnergies, Exxon and Chevron) are together making $2,600 profit every second, and there are now 62 new food billionaires.
Together with just three other companies, the Cargill family controls 70 percent of the global agricultural market. Last year Cargill made the biggest profit in its history ($5 billion in net income) and the company is expected to beat its record profit again in 2022. The Cargill family alone now has 12 billionaires, up from eight before the pandemic.
From Sri Lanka to Sudan, record-high global food prices are sparking social and political upheaval. 60 percent of low-income countries are on the brink of debt distress. While inflation is rising everywhere, price hikes are particularly devastating for low-wage workers whose health and livelihoods were already most vulnerable to COVID-19, particularly women, racialized and marginalized people. People in poorer countries spend more than twice as much of their income on food than those in rich countries.
Today, 2,668 billionaires — 573 more than in 2020 — own $12.7 trillion, an increase of $3.78 trillion.
The world’s ten richest men own more wealth than the bottom 40 percent of humanity, 3.1 billion people. The richest 20 billionaires are worth more than the entire GDP of Sub-Saharan Africa.
A worker in the bottom 50 percent would have to work for 112 years to earn what a person in the top 1 percent gets in a single year. High informality and overload due to care tasks have kept 4 million women in Latin America and the Caribbean out of the workforce. Half of working women of color in the US earn less than $15 an hour.
The pandemic has created 40 new pharma billionaires. Pharmaceutical corporations like Moderna and Pfizer are making $1,000 profit every second just from their monopoly control of the COVID-19 vaccine, despite its development having been supported by billions of dollars in public investments. They are charging governments up to 24 times more than the potential cost of generic production. 87 percent of people in low-income countries have still not been fully vaccinated.
“The extremely rich and powerful are profiting from pain and suffering. This is unconscionable. Some have grown rich by denying billions of people access to vaccines, others by exploiting rising food and energy prices. They are paying out massive bonuses and dividends while paying as little tax as possible. This rising wealth and rising poverty are two sides of the same coin, proof that our economic system is functioning exactly how the rich and powerful designed it to do,” said Bucher.
“Over two years since the pandemic began, after more than 20 million estimated deaths from COVID-19 and widespread economic destruction, government leaders in Davos face a choice: act as proxies for the billionaire class who plunder their economies, or take bold steps to act in the interests of their great majorities. One common economic sense measure above all will put this to the test: whether governments will finally tax billionaire wealth”.
Oxfam recommends that governments urgently:
Introduce one-off solidarity taxes on billionaires’ pandemic windfalls to fund support for people facing rising food and energy costs and a fair and sustainable recovery from COVID-19. Argentina adopted a one-off special levy dubbed the ‘millionaire’s tax’ and is now considering introducing a windfall tax on energy profits as well as a tax on undeclared assets held overseas to repay IMF debt. The super-rich have stashed nearly $8 trillion in tax havens.
End crisis profiteering by introducing a temporary excess profit tax of 90 percent to capture the windfall profits of big corporations across all industries. Oxfam estimated that such a tax on just 32 super-profitable multinational companies could have generated $104 billion in revenue in 2020.
Introduce permanent wealth taxes to rein in extreme wealth and monopoly power, as well as the outsized carbon emissions of the super-rich. An annual wealth tax on millionaires starting at just 2 percent, and 5 percent on billionaires, could generate $2.52 trillion a year —enough to lift 2.3 billion people out of poverty, make enough vaccines for the world, and deliver universal healthcare and social protection for everyone living in low- and lower middle-income countries.
http://www.oxfam.org/en/press-releases/pandemic-creates-new-billionaire-every-30-hours-now-million-people-could-fall http://www.oxfam.org/en/press-releases/g7-must-pursue-windfall-taxes-excess-corporate-pandemic-profits-and-cancel-poor http://www.oxfam.org/en/press-releases/g7-summit-media-brief http://www.actionagainsthunger.org/story/nearly-193-million-people-face-life-threatening-hunger http://static.hungermapdata.org/insight-reports/latest/global-summary.pdf
Visit the related web page
Next (more recent) news item
Next (older) news item