Curb tax dodging to turn back rising tide of inequality, G20 told
More than a third of the additional wealth generated by the G20 during the Australian Presidency has gone to the top one per cent, Oxfam revealed today as it called on the G20 to take urgent action to tackle tax dodging as part of a package of measures to reduce inequality.
Turn the Tide: Why the G20 must act on rising inequality, published ahead of the G20 Summit in Brisbane this weekend, urges leaders to tackle inequality head-on or risk leaving millions trapped in poverty.
It reveals that since December 2013, the total wealth in the G20 increased by US $17 trillion, but the richest one per cent of people in the G20 captured a staggering $6.2tr of this wealth – 36 per cent of the increase.
Oxfam’s report follows last week’s warning from the World Economic Forum that inequality is the biggest cause for concern for world leaders during 2015. The International Monetary Fund, World Bank and Organisation for Economic Co-operation and Development have also recently joined the chorus of voices concerned about the damaging effects of the gap between rich and poor.
Winnie Byanyima, Oxfam International Executive Director, said: “There’s a growing consensus that inequality needs to be urgently addressed, and G20 leaders are in a position to turn the tide.
“The G20 needs to commit to strategies of inclusive growth, and take action to reduce inequality rather than narrowly focusing on GDP.”
Oxfam calculates that poor countries miss out on $100bn each year because of corporate tax avoidance. The international agency said the G20-mandated global tax reform currently being led by the OECD is a step in the right direction. But because the majority of developing countries do not have a place at the negotiating table, it could end up being a missed opportunity to help millions of poor people.
Oxfam also called on the G20 to go further and address the problems of tax competition between countries, whereby poor countries engage in a race to the bottom, reducing their tax rates to attract foreign investment, and the question of where profits are taxed – where a country is headquartered or where it makes its profits.
For example, in 2012, the tax incentives for multinationals operating in Sierra Leone – where Ebola is currently raging – were equivalent to 59 per cent of the country’s entire budget, and more than eight times the government’s spending on health.
Ms Byanyima said a vivid example of the role of growing social and economic inequalities was the Ebola crisis, which was tearing through West Africa because countries didn’t have the public health infrastructure to stop it.
“G20 leaders need to swiftly ensure all the personnel, equipment and funding required to halt the Ebola outbreak are made available,” she said.
Ms Byanyima said a comprehensive approach to addressing the problem of inequality also demanded a focus on gender equity and a commitment to women’s rights that went beyond the G20 target to lift women’s participation in the workforce announced last week.
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