Business

The rich keep getting richer – Oxfam report

You can also listen to this podcast on iono.fm here.

DUDU RAMELA: The rich are getting richer while the poor are getting poorer. At this time of the year the World Economic Forum meets. A number of stakeholders are there, including government officials from around the world, including civil society groups, business people, etc.

And of course, Oxfam at this time of the year also release their report talking to inequality in the world. According to the latest report, billionaire fortunes are increasing by $2.7 billion a day while at least 1.7 billion workers now live in countries where inflation is outpacing wages.

Let’s speak now to Kwesi Obeng, regional programme advisor on inequality at Oxfam International. Kwesi, thank you very much for joining us this evening. Perhaps let’s start with how the report was put together.

KWESI OBENG: This is the 10th year we’re putting this report together, so we are not new at this. We have a fairly rigorous methodology in terms of the numbers, but the numbers mostly come from Credit Suisse, as well as Bloomberg, in terms of the number of billionaires. And then some of the other data essentially come from some of the major global databases that institutions like the IMF and World Bank play host to. So in terms of the quality of the report, it’s credible, and we haven’t had any issues in terms of its quality over the last 10 years that we’ve been publishing this report.

As you rightly pointed out, at any time in history this would be appalling – to have a tiny few of the population, just 1% basically, wealthy, and [grabbing almost two-thirds of new wealth – almost double that of the 99% a/t the report]. It’s coming on the back of a once-in-a-century pandemic.

Remember, on the back of this pandemic we have a multiplicity of damaging headwinds. You have the food and the energy crises. On the back of that you also have this inflation that is sweeping across the world.

What it means essentially is that 99% of the world’s population are having to bear the brunt of all of this wealth, that 1% basically accumulate pretty much all of the new wealth having been created over the last three years since we’ve had the Covid [pandemic].

That is a tragedy and dreadful, and it’s not as if our governments are incapable of responding to the crisis and reversing the trend so it benefits the 99% and not simply the 1%. They do have what it takes, but the question is why aren’t they taking the right decisions to ensure that there’s a balance in terms of who bears the burden? I think that’s the question that the paper seeks to respond to, also to provide some specific responses in terms of solutions, recommendations that governments could take to address this crisis that has been actually brewing over the last 40 years.

In fact, over the last 40 years we’ve seen the wealth of the topmost 1% [climb the] ladder up into the sky while the 99% have been on a descent. I think Covid just exposed that inequality around the world.

DUDU RAMELA: Kwesi, how do you then respond to somebody who says: ‘Ah, well, if people are working for their wealth, then let them enjoy it’? Is it as simple as that or is it far more complicated?

KWESI OBENG: Well, I think for anyone who presents that as a response, it’s being very simplistic and quite frankly unsophisticated, because the data does not bail that out. It’s not as if billionaires woke up some day, one morning in 2020, and suddenly became smarter than the rest of the world, or became more entrepreneurial than the rest, or became more hardworking than the 99%. No, what it is, is structural.

Over the last 40 years, there’s been a push towards cutting taxes for the super rich, while the rest of the population continues to bear the brunt.

I’ll give you just one example, which again is cited in the report.

There’s this middle-aged woman who sells flour in Uganda, in Kampala. She pays as much as 40% of her income [toward tax].

She makes barely the equivalent of R1 350, which is equivalent to about $80. Now she pays 40% of that, about R540 in taxes. One of the richest men in the world pays less than 3% of his wealth in taxes. How can that be fair?

It’s not as if this woman works any less, but it’s because the structures in place basically empower the rich to avoid paying their fair taxes. There is also a continuous pressure on governments to continue to cut down the tax burden of the rich.

Just one last point I need to make. In terms of income, somehow workers are punished for their earnings, and yet the rich who make R2.7 billion in a day get to basically get away without paying anything on their income. That can’t be fair and that can’t be right.

I think it’s more sophisticated than that. I’ll just give you one [more example], if you don’t mind. As recently as 1980, the US was placing as much as 70% in terms of the tax burden, in terms of how much it was charging the rich – 70% in terms of taxes. Today it’s come down and there’s pressure on a lot of countries to basically come down to the lowest end in terms of charging the richest in the world. So that accounts for why the rich continue to amass so much wealth while the poorest 99% of the world’s population are basically on a downward slope.

Essentially the point I’m trying to make – and the report makes it very succinctly – the rich are not paying their fair share of taxes.  So you have no insurance taxes, inheritance taxes, property taxes, capital gains, while labour is taxed heavily. Capital is not taxed.

DUDU RAMELA: You asked a question earlier on as to why governments are not taking action, why they’re not implementing policy or at least being innovative about it. What does the report reveal where that is concerned?

KWESI OBENG: Well – two things. One is that this level of wealth-grabbing by the tiny rich intersects with a number of very important issues in the world: issues around gender, issues around race and issues around colonisation.

Again, in the report, if you take just the top 1 000 richest people on earth, only 125 are women and only five of them – I’m not talking of 5% – only five of them are black. So there is an intersection within inequality and the wealth of….

Most of the wealthiest tend to be white men, essentially, from the global north, the developed countries. So the point we are trying to make is there’s a history to it, it’s structural in character, and we need to address it. It’s not one of [the] solutions. It’s obvious that we need to address the international financial architecture that is structured in such a way that it actually takes from those who have very little, and hands over to those who have more.

That’s the character of the international financial architecture that the report seeks to draw global and national attention to in terms of reversing  that trend. Quite frankly, it’s unacceptable in this particular age in the 21st century, when the world’s population is also growing and there’s pressure on basically the poorest of the world, 99% around the world, to carry this tiny fraction of the world’s population who continue to accumulate so much wealth to the detriment of everyone else.

I think Covid has exposed just how unfair and improper such a system and such a world economic structure is, and that it ought to be reversed –  at the barest minimum.

As I indicated, we do provide solutions in terms of what governments can actually do to reverse the trend. And I think that it’s important for our governments to pay attention to some of these solutions we propose.

DUDU RAMELA: Let’s get into the solutions, because you mentioned the nuances of gender, race, and colonisation. You speak of addressing the international financial architecture. When you take a look at the African continent, for instance, with everything that is on this continent, let’s take away the conflict, let’s take away the insecurity, let’s take away the security issues. Run significantly well, Africa can do even more than some people expect and even surpass that. And so, when we maybe take a look at the global south, but home in on the African continent, what then is the solution? What do governments need to do?

KWESI OBENG: Just a couple of months ago, before the close of 2020, African leaders tabled a motion at the UN General Assembly asking for the UN to set up a global one-tax body. Basically that brings everybody, every country, to the table. At the moment what we have is the one led by the OECD, which essentially is a club of rich countries, northern countries, where most of the richest, the top 1%, are based and are from.

So African leaders have recognised the need for a correction of the current structure, and they’ve tabled [that] and that’s been adopted at the United Nations. So that is definitely one step towards having a fairer international tax system that addresses the needs in particular of some of the countries and regions that have been marginalised in this current structure. But that’s just one [aspect].

I think governments, even before then, can begin to do some things.

One of them is that in many countries around the world, including most parts of Africa, they haven’t even started. There’s nothing like inheritance tax or property tax. So what it means is that you are actually giving away huge sums of money to those who already have so much.

What it also means is that you are taking  from those who have very little in these economies – as I referred to in the case of this woman – and are basically feeding the tiny rich minority. And the case is that it’s not simply the northern parts of the world that have this situation; you come to our own continent – it gets back to your question that we have the same scenario.

I’ll give you just the case of West Africa. If you take countries like Burkina Faso, Ghana, Senegal and Niger, 0.1% of the population own as much as 50% of the new wealth created in the last three years. So it’s pretty much a mirror image of what is happening globally, and therefore our governments really ought to act locally, but also act at the global level when there is space, as we’ve seen in terms of the tabling of that decision at the UN which has now been adopted by the General Assembly – that, yes, we need a global tax body to really address some of the inequities inherent in the current global financial architecture with regard particularly to taxation of wealth.

DUDU RAMELA: Kwesi Obeng is the regional programme advisor on inequality at Oxfam International.

That was all the time you could afford this evening. Thank you very much for your time.


Source link

Related Articles