October 16, 2014
Economic inequality is on the rise. Half of the world’s wealth is now owned by just one per cent of the world’s population. In Europe, austerity policies across the continent designed to cut debt and stimulate growth could instead push the number of Europeans at risk of poverty up to 146 million by 2025 – over a quarter of the population.
The problems are severe, but we want to focus on the solutions. As part of Blog Action Day 2014 on the topic of inequality, we look at how to redress the balance in favour of the many instead of the few.
1. CRACKING DOWN ON TAX DODGING
At least $18.5 trillion is hidden by wealthy individuals in tax havens worldwide, representing a loss of more than $156 billion in tax revenue. Amazingly, more than two-thirds of this amount is stashed away in territories within EU boundaries, such as Luxembourg or Malta. This is just a fraction of the total tax loss, as it only reflects the amount of tax that individuals are neglecting to pay. It doesn’t include the tax dodged by companies, whose dodgy-dealings and negotiated tax breaks could cost Africa alone an estimated $100 billion a year.
At Oxfam, we want to see individuals and companies paying their fair share of taxes. For example, we’re calling for an EU blacklist of tax havens and an agreement from EU governments to impose sanctions against them and those using them. Governments should also compel multinational companies to reveal where they really make their profits and where they pay their taxes. In Europe and across the world, this extra tax revenue could be key to financing public services, like health and education.
2. MORE MONEY FOR HEALTH CARE
Investing in health and education is one of the most powerful ways of fighting global inequality. Spending on these services has the same inequality-busting potential in rich and poor countries alike, reducing income inequality by between 10 to 20 per cent. This is why cuts in these services around the world are so catastrophic.
While public services can mitigate rising trends in inequality, user fees and funding cuts in both the North and South have the opposite effect. Healthcare fees push 150 million people into ruin every year around the world.
3. MORE MONEY FOR EDUCATION
Despite all this evidence, between 2008 and 2012, more than half of all developing countries cut their education spending and two-thirds cut spending on healthcare. These cuts focus the pain of austerity directly at those who can least stand it.
Governments must value the impact of free public services and not introduce fees, budget cuts or other privatization of services that hit the poorest hardest, when inequality is already stacking the deck against them.
4. WORKING FOR THE MANY
Wealthy elites have co-opted political power to rig the rules of the economic game, undermining democracy and hindering economic growth and poverty reduction.
Economic inequality can lead to “opportunity capture”, which means that the best education, the best health care and the lowest tax rates will be claimed by the children of the rich.
If inequality is not addressed quickly, we will soon live in a world where equal opportunity is just a dream. Rather than leaving the rest of us to fight over scraps from the top table, the investments and policies needed to put right the imbalance of inequality must be addressed if the global poverty currently affecting over a billion people is to be truly made a thing of the past.
Àngela Corbalán is Oxfam’s Head of EU Communications and Paul Creeney is Oxfam’s EU Communications Assistant.Oxfam International EU Advocacy