For the first time in 25 years, we have seen extreme wealth and extreme poverty increase simultaneously. The world’s five richest men doubled their fortunes since 2020 while five billion people have been made poorer. Credit: Lova Rabary-Rakontondravony/IPS

By Amitabh Behar
NEW DELHI, Aug 6 2024 (IPS)

We are living in a world of multiple crises of inequality, climate breakdown and conflict. Billions of people globally are facing huge hardship. Whole governments, too, are virtually bankrupt, with extremely high debt levels forcing them to implement brutal and deeply unpopular cuts and tax rises for ordinary people. 3.3 billion people live in countries that spend more on debt interest payments than on either education or health.

For the first time in 25 years, we have seen extreme wealth and extreme poverty increase simultaneously. The world’s five richest men doubled their fortunes since 2020 while five billion people have been made poorer. In his 2023 SDG Progress Report, the United Nations Secretary-General announced that the sustainable development goal (SDG) which tracks inequality is one of the worst performing.

Tax is one of the most important levers that a government has at its disposal to reduce economic inequality and generate revenue for governments to spend on policies that reduce inequality. Historically, taxation of the ultra-rich has helped to create more equal societies and prevent an extreme gulf from emerging between the haves and the have-nots.

Half of the world’s billionaires live in countries with no inheritance tax for direct descendants. They will pass on a $5 trillion tax-free treasure chest to their heirs – which is more than the GDP of Africa—beginning the next generation of aristocratic elites

However, in the decades prior to the pandemic, progressive taxation collapsed. The ultra-rich and corporations have been favoured with low-tax regimes, while taxes on billions of ordinary people have increased.

Billionaires are paying tax rates as little as 0.5% on their immense wealth, a fraction of that paid by teachers or nurses. Meanwhile, billionaire fortunes are rising at an annual average of 7% over the past four decades –far faster than the wealth of ordinary people.

The call for increased taxation on the ultra-rich is gaining momentum. For the first time in its history, in June, G7 leaders committed to working together to increase progressive taxation.

Under the Brazilian G20 Presidency in July, G20 Finance Ministers committed for first time ever to cooperate on taxing ultra hight net wealth individuals more effectively. Oxfam strongly supports the Brazilian G20 Presidency’s initiative to set a global standard on taxing the super-rich.

At the G20 Summit in November this year, leaders need to go further than their finance ministers and back concrete coordination: agreeing on a new global deal to tax the ultra-rich at a rate high enough to close the gap between them and the rest of us. Political leaders are waking up to this being a very popular policy; even wealthy individuals support higher taxes on themselves.

Nearly three-quarters of millionaires in G20 countries support higher taxes on wealth, and leading figures such as Abigail Disney have been vocal in their support of a global effort to tax the ultra-rich.

Greater taxation of the world’s richest individuals is not the only answer to the inequality crisis, but it is a fundamental part of it. A one-off solidarity wealth tax and windfall taxes would raise funds that can be directed to provision of public goods. It is feasible to make these progressive changes.

Italy was one of the first countries to impose a windfall tax, and after WW2 the French government taxed excessive wartime wealth at a rate of 100%. A similar level of ambition is needed today.

Further, governments should permanently increase taxes on the richest 1%, for example to at least 60% of their income from labour and capital, with higher rates for multi-millionaires and billionaires. They must especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income.

Permanent taxation of wealth that rebalances the taxation of capital and labour can greatly reduce inequality, as well as tackle the disproportionate political power and the outsized carbon emissions of the super-wealthy.

We need to see the wealth of the richest 1% taxed at rates high enough to significantly reduce the numbers and wealth of the richest people and redistribute these resources.

This includes implementing inheritance, property and land taxes, as well as net wealth taxes. Half of the world’s billionaires live in countries with no inheritance tax for direct descendants. They will pass on a $5 trillion tax-free treasure chest to their heirs – which is more than the GDP of Africa—beginning the next generation of aristocratic elites.

Above all, we want to see a shift in imagination from governments. A reckoning that more of the same —more billionaire wealth, and a deeper plunge into a cost-of-survival crisis— is the definition of insanity and more suffering for billions of people. We need to heed the evidence, but also look to history, and what ordinary people are calling for around the world.

Closing tax loopholes and ensuring that the richest pay their fair share would reduce inequality and raise trillions of dollars urgently needed to stop climate breakdown and invest in fairer societies for everyone.

It would put people and planet before the needs of a rich few. The time has come for governments to shake off decades of failed ideology and rich elite influence, and to do the right thing: tax the ultra-rich.

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The poorest people in some of the least responsible regions for climate change or emissions - like East Africa - are losing their lives and livelihoods to human-induced climate change. Credit: Charles Karis/IPS

By Fati N'Zi-Hassane and Amitabh Behar
NAIROBI, Sep 6 2023 (IPS)

From 2017, Shamso Isac has helplessly witnessed the demise of all her sources of income. Failed rain seasons and dried-up water sources meant a lack of pasture, which led to the death of her livestock. Widespread hunger exacerbated by rising food costs forced her to relocate to Burlhedi internally displaced persons camp in Baidoa in the Southwest state of Somalia. She recalls walking for weeks seeking a place she could get food for her family. When her child asks for something to eat or drink, she has nothing to offer; all she can do is cry, overwhelmed by the utter hopelessness she feels.

The devastating droughts and floods in these four East African countries have also costed the region an estimated $30 billion losses from 2021 to the end of 2023 with Oxfam calculating that approximately $7.4 billion worth of livestock have perished, pushing farmers and pastoralists deeper into poverty

Shamso’s story mirrors that of millions across East Africa and many other parts of the world. Despite contributing a mere 0.1% of global emission, millions are bearing the harshest impact of climate change with over 31.5 million people across Ethiopia, Kenya, Somalia, and South Sudan experiencing the worst episode of climate-induced extreme weather, which is fuelling an alarming hunger crisis.

The devastating droughts and floods in these four East African countries have also costed the region an estimated $30 billion losses from 2021 to the end of 2023 with Oxfam calculating that approximately $7.4 billion worth of livestock have perished, pushing farmers and pastoralists deeper into poverty.

Climate change has resulted in the rise of the global temperature by up to 1.2° Celsius making the severity of East Africa’s drought 100 times more likely. The poorest people in some of the least responsible regions for climate change or emissions – like East Africa – are losing their lives and livelihoods to human-induced climate change. Rich industrial countries are responsible for 92% of excess emissions.

Yet, it is the people like those in Ethiopia, Kenya, Somalia and South Sudan that are facing a multitude of detrimental social, economic and health impacts that are exacerbated by climate change. Small island nations are losing their land to rising oceans and if this trajectory persists, entire countries could disappear under rising sea levels. The climate crisis is a human tragedy and is making existing inequalities and injustices a whole lot worse.

Climate justice demands that those responsible for causing the crisis must be held accountable, and those most affected must get adequate support to adapt to the problems and mitigate them. Why does this matter? It matters because it compels the global community and those primarily responsible for the climate crisis to work with and support those who bear the heaviest burden.

It matters because it addresses a more systemic problem that is the fundamental cause of this crisis and many others. The problem is an economic model that is fossil-dependent and designed to benefit a select few, the super-rich, and that’s causing a planetary crisis and aggravating social injustices around the world.

A fundamental shift is needed to effectively tackle this injustice, without which, extreme weather conditions will recur more frequently and with increasing intensity leading to more hunger and human suffering in the future in countries where people have done the least to contribute to climate change.

As a crucial starting point, the governments of industrialized countries must pay their fair share of climate finance and honour their commitment to provide 0.7% of their Gross National Income to the Global South countries including the $8.74 billion needed to support for the humanitarian response in Ethiopia, Kenya, Somalia, South Sudan in order to save lives and livelihoods.

To fill this gap, governments in the affluent and in the industrialised nations must ensure companies and the rich are paying their fair share of taxes, not least those profiting from harming the planet. This will enable these countries and communities at the frontline to start building back and build resilience for the next climate shock.

Secondly, the top polluting countries must pay their fair share of the climate finance to East Africa to help its governments scale up their climate mitigation and adaptation so they can help the most impacted communities to recover from climatic shocks. These funds should no longer be in the form of loans but as grants.

Finally, industrialized polluting countries should commit to paying their fair share of the losses and damage suffered by East Africa countries. Estimates show that these polluters owe $8.7 trillion to developing countries, including in Africa. This finance will be crucial to support communities and countries to adapt to climate change, recover from damage and loss and to transition to clean development.

We need to embrace a fundamental, systemic change. Even as we’re saving lives through the humanitarian response, we must also focus on the root causes of the climate change crisis and food insecurity.

Hunger is unacceptable in the 21st century. To witness millions suffering from lack of food in a world of plenty and in a world where billionaire wealth has exploded, is an abomination. The hope side of this doom-and-gloom scenario is that we have the resources in the world to address these challenges. The right leadership and political choices can end hunger. The time to act is now.

Fati N’Zi-Hassane is the Oxfam in Africa Director at Oxfam International. Amitabh Behar is the Interim Executive Director at Oxfam International

A woman holding a child begs at an intersection in New Delhi. Credit: Ranjit Devraj/IPS.

By Amitabh Behar
NEW DELHI, Mar 14 2022 (IPS)

It is no secret that economic inequality has risen exponentially in the last few decades, both in India and globally. According to the World Inequality Report 2022, India is one of the most unequal countries in the world in terms of both income and wealth inequality. It is estimated that in 2021, the top 10 percent of Indians held 57 percent of the total national income while the bottom 50 percent’s share was just 13 percent.

The pandemic has sharply exposed and amplified these inequalities. Another recent report on inequality from Oxfam India found that in 2021, the combined wealth of billionaires in India doubled—the same year when 84 percent of Indian households saw a decline in their incomes and 46 million people slid into poverty due to the pandemic.

These numbers tell a clear story about the obscene levels of inequality we’re witnessing. And it’s important that we start talking about and addressing this right now because it’s morally unacceptable to have an unequal society of this kind. We cannot have a few families and individuals accumulating record wealth while most people on the planet suffer from climate change, lack of healthcare, and hunger. It’s not viable economically, and it is socially and politically dangerous.

What needs to change?

India ranks the lowest in the number of hospital beds per thousand population among the BRICS nations—Russia scores the highest (7.12), followed by China (4.3), South Africa (2.3), Brazil (2.1), and India (0.5). India also ranks lower than Bangladesh (0.87), Chile (2.11), and Mexico (0.98)

The COVID-19 pandemic showed us how inequality is not just an issue for economists but something that affects each one of us. Take for example the case of India’s health budget. For the last two to three decades, we’ve known that the health system and the healthcare infrastructure are severely underfunded—we have invested just about 1.25 percent of our GDP towards health.

India ranks the lowest in the number of hospital beds per thousand population among the BRICS nations—Russia scores the highest (7.12), followed by China (4.3), South Africa (2.3), Brazil (2.1), and India (0.5).

India also ranks lower than Bangladesh (0.87), Chile (2.11), and Mexico (0.98). Data shows that India currently has about 1.7 trained nurses per 1,000 people, against the WHO norm of four nurses per 1,000 people—a clear indicator of an under-resourced healthcare system. And we saw what an underfunded health system does to its people, particularly during the second wave of COVID-19, where everything from hospital beds, oxygen, and essential medicines to vaccines was in short supply.

To change this, the government must have resources to invest in social infrastructure, such as education, healthcare, and housing, because they are the best drivers of equality. But how do we generate new resources to fund social welfare? The answer is twofold.

1. Higher taxes on the super-rich

There is clear evidence to show that a direct tax on the super-rich—be it in the form of a wealth tax, wealth surcharge, or inheritance tax—can be used to fund measures that combat inequality. For instance, a 1 percent wealth tax on the 98 richest billionaire families could finance India’s flagship public health insurance scheme, Ayushman Bharat, for more than seven years.

Even with a 1 percent wealth surcharge, the super-rich will continue to be richer than they were pre-pandemic. So from an economic perspective, the decision makes sense. And India isn’t the first country to be talking about this. Recently Argentina successfully imposed a new wealth tax on the super-rich to help pay for its COVID-19 response.

2. Ensuring that people pay their fair share of taxes

If we want to build a more equal society, we also need to ensure people pay their fair share of taxes. Last year, the Tax Justice Network did a study that showed that globally USD 427 billion is lost to tax evasion every year. And this is true for India as well. In 2012, Professor Arun Kumar estimated that the size of India’s black economy was 62 percent of the GDP and that it was growing at the staggering rate of 20 percent.

While taxation is an important piece when it comes to solving the inequality puzzle, it is one of many available solutions. What we need is an integrated approach where different sectors and stakeholders each play a part. For example, Oxfam can publish an inequality report advocating for higher wealth taxes and investments in social welfare.

But at the same time, we need somebody—say, for instance, the National Coalition for Education—to seek accountability from the government in terms of the investments it’s making in education. And simultaneously, we need a civil society collective such as Jan Swastha Abhiyan talking about how we can invest in and ensure that we have a more robust public health system. All these are interlinked, and as a sector, it’s important for us to understand that we cannot work in silos and our solutions cannot be microscopic. Because the issue of inequality is systemic—we live in an economic system that favours the super-rich.

Often the common argument against raising taxes to fund government systems is that they are inefficient. There’s this concern that if you put in more resources, it will not go to the right places. However, there’s enough evidence to tell us that this is not the full story. Data shows that the government investments in public services actually improve outcomes and reduce inequality.

The real story is that there are vested interests in favour of maintaining the status quo. There exists an unfortunate nexus between policy makers in the government and the super-rich. And therefore, as a society, we are not able to make decisions that may be detrimental to the interests of the super-rich. And that is the problem we need to overcome.

Take, for instance, the fact that till 2015, India had a wealth tax. Similarly, last year India also lowered the corporate tax rate from 30 percent to 22 percent to attract investment, which resulted in a loss of INR 1.5 trillion and contributed to the increase in the country’s fiscal deficit.

This concentrates wealth in the hands of the rich, making them even richer. It’s critical, therefore, that we talk about reintroducing these taxes because the government needs these resources to fulfil its objectives of promoting social welfare.

The other argument against taxation is that many of the super-rich engage in charity, and that is one way in which they help reduce inequality and promote social justice. While this is true to some extent, it is the responsibility of the state—rather than philanthropy—to guarantee an individual’s basic fundamental rights. Why should anyone depend on the whims and fancies or even the charity of another individual?

The fundamental idea of any modern state is to ensure some basic fundamental rights to its citizens, such as health, education, and social security. So why should society depend on the super-rich and their decisions about when, how, and to whom to give money? The Indian Constitution guarantees the right to education, the Directive Principles of State Policy talk about the right to health, and the onus lies on the state to deliver these. Any philanthropic work that happens needs to be done over and above millionaires paying their fair share of taxes.

What role can each stakeholder play?

As a society, there are multiple tangible steps that we can take to reduce inequality and build a more just and equitable society. One of the first things we must do is start acknowledging how a growing number of billionaires is not a sign of success; it is a sign of the failure of the economic system we have created—particularly when we look at these numbers in the context of millions of people sliding into poverty. There needs to be a shift in the public narrative to talk about how the business-first policies that we have are leading to greater inequality.

Fighting inequality is not about targeting individual billionaires but the economic system that allows the concentration of wealth at the top while the majority continue to live in misery without their rights. Here’s what different stakeholders can do:

1. The super-rich

To begin with, the billionaires and the millionaires need to pay their fair share of taxes. Globally, we are already seeing the emergence of groups such as Patriotic Millionaires and Millionaires for Humanity, who are asking governments to tax them more so that they can contribute towards national development and building a more equitable society.

2. Businesses

In addition to paying their share of corporate taxes, businesses need to start thinking about how they can ensure living wages for everyone so that people can live a life of dignity.

Businesses also need to start looking at their supply chains, where many inequalities are amplified and reproduced. What we are increasingly seeing now is that the main business is fairly compliant on labour laws. But most also have a very limited part of their process happening in their own factories—a large part of it is outsourced to other organisations in the supply chain. So holding the supply chain accountable is critical.

3. The government

The government needs to tax more—implement more direct taxes, a wealth tax, an inheritance tax, and higher corporate tax. We also need to ensure that once there are greater revenues with the government, they’re invested in the right places, like education, health insurance, and social security.

4. Civil society

The role that civil society can play here is one of catalysing change. Civil society needs to consistently talk about the growing inequality and not buy into this idea that wealth will be created at the top and then eventually get distributed.

Beyond that, it needs to continue the work it does on education, health, gender justice, Dalit empowerment, and climate justice, all of which address inequality. Because taken together, these end up becoming double or triple discrimination for people.

The last and arguably biggest piece is holding the government and businesses accountable—accountable to the standards the Constitution sets for the state and that governments and businesses are setting for themselves.

As we grapple with the growing challenge of inequality, it is apparent that we cannot morally accept a society where some of us slept comfortably during the lockdown while thousands of others walked in extreme heat without food, pushed out of the very cities they built. And while the challenge in front of us is growing, there is also hope that will push us to come together and work harder to build a more equal society.

Amitabh Behar is the CEO of Oxfam India, and former executive director of the National Foundation for India. His areas of interest include governance and civil society, social action, and government accountability. He is vice-chair of CIVICUS, convener of the National Social Watch Coalition, and board member of the Global Fund for Community Foundations. Previously, he worked as the executive director of the National Centre for Advocacy Studies and co-chair of the Global Call to Action Against Poverty.

This story was originally published by India Development Review (IDR)