Oxfam has called for urgent action to tackle widening post-Covid global inequality after it revealed that nearly two-thirds of the new wealth gained since the start of the pandemic has gone into the hands of the richest 1.
In the report, which coincides with the annual gathering of the global elite at the World Economic Forum in Davos, the charity said the best had invested $26tn (£21tn) of new wealth by the end of 2021. This represented 63 per cent of total new wealth, with the rest it goes to the remaining 99% of people.
Oxfam said that for the first time in a quarter of a century, the rise in extreme wealth has been accompanied by an increase in extreme poverty, and called for new taxes on the super-rich.
Policies put in place to combat the economic impact of Covid-19 – such as interest rate cuts and the money creation process known as quantitative easing – have boosted the value of assets and stocks, which are typically owned by wealthier people.
The report found that for every dollar of new global wealth earned by a person in the bottom 90% over the past two years, each billionaire gained roughly $1.7 million. Despite small declines in 2022, the billionaires’ combined wealth increased by $2.7 billion per day. The gains from the pandemic came after a decade in which both the number and the wealth of billionaires doubled.
Danni Sriskandarajah, CEO of Okfam GB: “The current economic reality is an affront to basic human values. Extreme poverty is increasing for the first time in 25 years and close to a billion people are starving, but for billionaires every day is real happiness.
“Multiple crises have pushed millions to the brink, while our leaders fail to grasp the sting – governments must stop acting in favor of the interests of the few.”
“How can we accept a system where the poorest people in many countries pay much higher tax rates than the super-rich?” Governments must now impose higher taxes on the super-rich.”
Oxfam said the extreme concentration of wealth has led to weaker growth, corrupted politics and the media, eroded democracy and led to political polarization. The super-rich were key contributors to the climate crisis, the charity added, with the billionaire emitting a million times more carbon than the average person. They are also twice as likely to invest in polluting industries, compared to the average investor.
The report urged governments to introduce immediate one-off wealth levies on the richest 1%, along with a windfall tax to curb profiteering during the global cost-of-living crisis. After that, there should be a permanent increase in taxes on the rich, with higher rates for multi-millionaires and billionaires.
In support of its call for wealth redistribution, Oxfam said:
Food and energy companies more than doubled their profits in 2022, paying out $257 billion to wealthy shareholders at a time when more than 800 million people went hungry.
Only 4 cents on every dollar of tax revenue came from wealth taxes, and half of the world’s billionaires lived in countries with no inheritance tax on the money they pass on to their children.
A tax of up to 5% on the world’s multimillionaires and billionaires could raise $1.7 trillion a year, enough to lift two billion people out of poverty and fund a global plan to end hunger.
In a foreword to the report, Colombia’s finance minister, José Antonio Ocampo, said: “Taxing the richest is no longer an option – it’s a necessity. Global inequality has exploded and there is no better way to tackle inequality than by redistributing wealth.”
He added: “Fairness is at the heart of Colombia’s tax reforms. Specifically, this means a new wealth tax, higher taxes on high-income earners and large corporations that reap extraordinary profits in international markets, and the elimination of tax incentives that exist without clear social or environmental justification.
“We are also implementing taxes on digital services and adopting a minimum corporate tax rate, building on the international tax treaty.”