Inequality

,

A world where 8 men own the same wealth as humanity’s poorer half

16/01/17

A new Oxfam report, An Economy for the 99%, published by Oxfam today shows that the inequality crisis is far bigger than previously thought – today just eight men own the same wealth as the 3.6 billion people who make up the poorer half of humanity. This huge gap between the super-rich and the rest of us is trapping millions in poverty, fracturing our societies and undermining democracy.

The vast majority of people at the bottom half of the world’s population are very poor people who are struggling to get by. Approximately 70% of this group live in low income countries. One in four people live in India, while one in five is in sub-Saharan Africa. Just 1% are in North America and 8% in Europe.

It is true that in recent decades poorer countries have been growing faster than richer ones, and we are starting to see the gap between countries narrow. Hundreds of millions of people have been lifted out of poverty in recent decades, an achievement of which the world should be proud. Yet one in nine people still go to bed hungry. Had inequality not increased over this period, 700 million more people, most of them women, would not be living in poverty today. The World Bank is clear that without redoubling their efforts to tackle inequality, world leaders will miss their global goal of ending extreme poverty by 2030. 

At the same time, inequality within nations has been rising in the majority of countries over the last 30 years and is having a hugely negative impact on many people’s lives. 

Meet Jane

Jane Muthoni she sells homemade bags, mats, jewellery, soap and tie-dyed material in one of Nairobi’s many informal settlements. The small amount of money she makes helps put food on the table and send her two children to school. But it’s hard for small stallholders like Jane to earn enough money, no matter how hard they work. Though they pay fees and taxes to trade, Jane says they don’t have the same rights and services as rich people. 

“We do not have very good roads,” says Jane. “We don’t have good houses. There is no proper drainage. When it is dark, there are no lights. It is very unfair because we are all Kenyans. We are entitled to equal rights, but there are those big people who do things I can’t because I don’t have money.

“The gap between poor and rich people in Kenya is sometimes very humiliating. To see that it is just a wall that defines these rich people from the lower class. You find that some of their children drive cars and when you are passing around the roads you get covered in dust, or if it is raining you are splashed with water.”

Above left: Jane Muthoni (front in striped top) with fellow members of Shining Mothers, a community based group teaching women  business skills. The group also ensures their voice is being heard by the local government.  Photo: Allan Gichigi/Oxfam. Above right: Jane describes her local area to Oxfam’s Joyce Kabue and points out poor public services in her community in Kawangware, Nairobi, Kenya. Photo: Allan Gichigi/Oxfam

Jane is trying to change this situation. She has set up a community women’s group called the Shining Mothers, which is supported by one of Oxfam’s local partners. This group has regular ‘table banking’ meetings to teach business skills and help each other with their savings and loans. The Shining Mothers discuss issues which affect them in their community and raise these at public meetings, to ensure their voice is being heard by the local government.

At a recent meeting with the council, Jane and the Shining Mothers raised the issue of council fee collection and it was established that the council should only come twice a week. Empowered with this knowledge, the Shining Mothers have pushed back against the exploitative fees and have been able to continue saving for their business licence.

“That is the most enjoyable thing, empowering my community,” Jane added. “Because if a community is not empowered, we will live in poverty forever.”

While Jane struggles, Kenya’s economy is growing. The richest Kenyan’s net worth is over $700 million, yet 42% of the country’s 44 million people still live below the poverty line. Big corporations operating in Kenya pocket $1.1 billion a year in tax incentives. Yet small-scale traders like Jane face difficult application processes in order to access credit and loans. Many are forced to pay unlawful daily fees to the county government in order to operate yet there is no waste collection, infrastructure or even a decent water supply in the informal trading areas where they work.

Economic growth does not automatically translate into society-wide prosperity for people like Jane, unless appropriate policies are implemented by governments across the world.

The extreme levels of inequality documented in our new report are having major national and international consequences. From Brexit and the success of Donald Trump’s US presidential campaign, to the rise of populism around the globe and widespread disillusionment with mainstream politics, there are increasing signs that more and more people are no longer willing to tolerate the status quo. 

The last time the world experienced similar extreme levels of inequality was at the start of the 20th century, where we experienced 30 years of violent political upheaval and war as a result of inaction on inequality.

This report lays out a blueprint for what a more human global economy would look like, which includes greater cooperation between governments on tax dodging to generate the funds needed to invest in healthcare, education and job creation, and by dismantling the barriers to women’s economic progress such as access to education and the unfair burden of unpaid care work. (On current trends it will take 170 years for women to be paid the same as men).

Tax revenues are critical for funding the policies and services that can fight inequality including infrastructure, health and education. The use of tax havens and loopholes or the securing of preferential tax treatment doesn’t just reduce abstract balance sheets. Everyone else is forced to pick up the bill and the human cost is borne by the most vulnerable in society.

Take action on tax

In this respect Ireland needs to fulfil its commitments to reform and be part of a fair and just tax system at EU and international level. We need to tackle aggressive tax planning, to implement strong controlled foreign company rules to prevent profit-shifting and improve transparency by forcing multinational corporations to make public where they make profits and pay tax. Ireland needs to support a new generation of international tax reforms beyond what has been agreed at EU and OECD level to date, including the creation of a global tax body.

With Northern Ireland set to take control of corporation tax in 2018, the Stormont Executive must ensure any new proposed tax regime here is fair, open and transparent – and that it does not negatively impact on vulnerable people. Any reform of the corporate tax system must contain safeguards preventing corporations from taking advantage to avoid tax owed elsewhere. Otherwise there is a risk that Northern Ireland could be used as a tax haven. 

Finally, it is important to remember that inequality is not inevitable. Global inequality has been reversed before, and can be again. World leaders can rebalance economies with every budget passed and every rule of law or regulation written or dismantled. As per the name of our campaign against economic inequality, is time to ‘Even it Up’. 

Michael McCarthy Flynn is Oxfam Ireland’s Senior Research and Policy Coordinator 

 

Watch Jane's story

Posted In:
,

Tax battles: Home truths on tax

If you were asked to picture a typical tax haven, you would probably start thinking of an exotic island with palm trees and golden sandy beaches. And yes, the stereotype is partly true. Bermuda, Barbados and the Bahamas certainly fit that bill. 
 
So far, so typically tropical. But some other tax havens are closer to home than you might think.
 
That’s because a new Oxfam report – entitled ‘Tax Battles’ – found Ireland ranked 6th in a new league table of the world’s worst corporate tax havens which help big companies avoid paying their fair share of tax.
 
And it’s costing governments the world over billions that could pay for health, education and tackling poverty. 
 

TAX BATTLES

 
Ireland’s score was based on its lack of effective rules to prevent corporate tax dodging and because it facilitates large-scale corporate tax avoidance through profit-shifting and aggressive tax planning structures. 
 
Loopholes and so-called sweetheart deals – like the tax arrangements enjoyed by Apple, which enabled the global tech giant at one point to pay a 0.005 percent corporate tax rate – mean big firms can dodge tax here and in poor countries, where that cash is needed to pay for roads, doctors and schools. 
 
The full list of the world’s worst tax havens, in order of significance are: (1) Bermuda, (2) the Cayman Islands, (3) the Netherlands, (4) Switzerland, (5) Singapore, (6) Ireland, (7) Luxembourg, (8) Curaçao, (9) Hong Kong, (10) Cyprus, (11) Bahamas, (12) Jersey, (13) Barbados, (14) Mauritius and (15) the British Virgin Islands. The UK does not feature on the list, but four territories that the United Kingdom is ultimately responsible for do appear: the Cayman Islands, Jersey, Bermuda and the British Virgin Islands.
 

AGGRESSIVE POLICIES

 
The 15 countries earned their place on the ‘world’s worst’ list because they have adopted an aggressive set of policies which are helping big firms to minimise their tax bills, leaving those who can least afford it to pick up the tab. 
 
Oxfam researchers compiled the ‘world’s worst’ list by assessing the extent to which countries employ the most damaging tax policies, such as zero corporate tax rates, the provision of unfair and unproductive tax incentives, and a lack of cooperation with international processes against tax avoidance (including measures to increase financial transparency). 
 
Through loopholes, secrecy and driving unfair tax competition, tax havens are undermining the ability of poor countries to collect the cash they need to pay for health and education, vital to lifting people out of poverty. 
 
People here don’t want it to be this way – 82% told us earlier this year the Irish government should be tackling tax dodging and champion fair taxation. Ireland should take immediate action to curb corporate tax havens and their role in harmful tax competition by agreeing international tax haven criteria and a clear public list of where the tax havens are. Strong measures including sanctions should be adopted to limit profit shifting.
 
And people in Northern Ireland want the UK government to prioritise ending tax avoidance, with 89% telling us last month they are concerned when big firms don’t pay their fair share of tax, ordinary people pay the price. 
 

HOW TAX DODGING IMPACTS PEOPLE

 
This tax dodging is affecting ordinary tax payers like you and Kyohairewe, a coffee producer in Uganda. 
 
Kyohairewe pays her taxes – but tax dodging by big companies means there is not enough money for essential services and infrastructure spending in the country. Roads are in such bad condition that Kyohairewe struggles to bring her produce to her customers in the market, restricting her chances of earning a livelihood.
 
If people such as Kyohairewe (pictured below) have to pay a fair rate of tax, why shouldn’t wealthy big businesses and multi-national companies do the same? 
 
 
Above: Kyohairewe, a coffee producer in Uganda, pays her taxes – but tax dodging by big companies means the roads are such bad condition that she struggles to bring her produce to her customers. Photo: Pablo Tosco/Oxfam
 
The UN estimates that tax dodging by multinationals costs poor countries at least $100 billion (approx. €92bn/£79bn) every year, with devastating consequences for the world’s poorest people. This money could ensure that the 124 million children currently not in school get an education and provide healthcare that could save the lives of six million children a year. Corporate tax revenue is doubly important as a proportion of total tax revenue in poor countries as in rich ones.
 

EVEN IT UP

 
That’s why your support for our Even It Up campaign is so important. We need to press governments and companies to make tax fair and transparent, so we can see what’s really going on. We need to close loopholes and make sure Ireland and the UK improve their tax policies and practices here, and support global plans to make tax fair. 
 
We need an end to the era of tax havens.
Posted In:
,

92% public support in Northern Ireland for an end to corporate tax dodging

Let’s be honest – a tropical tax haven island looks a bit out of place in Belfast.

The reason why we brought palm trees and deckchairs to the heart of the city was to highlight new research showing the kind of scenario people want to avoid as a result of any change to Northern Ireland’s corporation tax rate.
 

 
The new research, commissioned by Oxfam and undertaken by Millward Brown Ulster, found:
 

• 92% of people in NI say governments should ensure big firms pay tax in poor countries which need more revenue to tackle poverty;

• 89% are concerned that when big companies and wealthy individuals use tax loopholes to avoid paying their fair share of tax, ordinary people pay the price because of the impact on public services;

• 87% say that ending this tax avoidance should be a priority for Theresa May’s government;

• 88% of those polled say the public have a right to know where big companies are making profits and paying tax;

• 80% say the gap between the richest and the rest of society is rising and making Northern Ireland a more unequal place

Help us make tax fair in Northern Ireland and across the UK - tell Prime Minister Theresa May to tackle tax dodging.

With Northern Ireland set to take control of corporation tax in 2018, it’s clear from this survey that there is overwhelming public support to ensure any new proposed tax regime here is fair, open and transparent – and that it does not negatively impact on vulnerable people.

Any reform of the corporate tax system needs to contain safeguards preventing companies from taking advantage to avoid tax owed elsewhere – otherwise there is a risk that Northern Ireland could be used as a tax haven.

What we mean by safeguards includes making multinational companies publish tax information for all countries where they are present. In addition, we want to see the establishment of a public centralised register of beneficial ownership that would allow citizens here and in developing countries to know who is really behind companies and trusts.

What’s needed is an economic policy that will bring jobs, prosperity and stability to the province, without being at the expense of essential public services in Northern Ireland or in poor countries.

The Stormont Executive has an opportunity to create a best in class tax system that reflects genuine economic activity and works for the people of Northern Ireland, not against them. This should take into consideration the local and global dimensions of tax avoidance and its impact.

The impact of tax dodging can seem like an abstract thing but it has a very real human cost. An estimated $100bn (approximately £79bn) is lost to developing countries every year because of tax dodging by multinationals. Every school that is not built, every medicine that is not bought for lack of government funds due to tax dodging affects thousands of men, women and children across the world.

Our Make Tax Fair campaign highlights that tax dodging is starving developing countries of the money needed for education, healthcare and tackling poverty.

 

Posted In:
,

Apple tax ruling tip of the iceberg - EU governments must do more

The European Commission today ruled that Apple received €13 billion in illegal state aid from the Irish government.

This decision follows the investigations on illegal state aid between the Dutch government and Starbucks, the Luxembourg government and Fiat, and the Belgian government for its ‘excess profit’ tax scheme.

Reacting to the decision, Jim Clarken, Chief Executive at Oxfam Ireland, said: “Ireland has benefitted from multinational investment but all companies should operate here under rules which are fair and which do not benefit some companies over others. Deals that exempt companies from paying their legitimate share of tax mean the ordinary taxpayers have to foot the bill.

“Apple is one of the world’s most well-known companies and Irish consumers want their favourite brands to do the right thing and pay their fair share of tax. A nationwide survey commissioned by Oxfam earlier this year found that the vast majority (86%) of people believe that big companies are using tax loopholes to dodge paying their fair share of tax. 83% believe vital public services like schools and hospitals in Ireland and across the world are suffering as a result.

“The Government now must move to end these practices for once and for all, and reassure citizens that sweetheart tax deals with either companies or individuals are a thing of the past. They cannot be tolerated, especially when public services are in vital need of investment.

“So far, multinationals found by the European Commission to have benefitted from sweetheart deals only have to pay the taxes they were previously able to avoid and no additional fines are levied. The status quo clearly does not pose a sufficient deterrent whatsoever.

“Adequate measures to prevent such deals in the future must include public disclosure of where multinational companies generate profits and where they pay their taxes, giving governments and citizens the power to hold them to account.

“A proposal earlier this year by the European Commission obliging companies to publicly disclose more information about their tax arrangements is too weak – it will only apply to the biggest of companies and the information they need to provide is too limited. The European Parliament and Member States need to strengthen these requirements by making them apply to all large multinationals, and multinationals must be forced to publish tax information for all countries where they are present. “In addition, the establishment of a public centralised register of beneficial ownership would allow citizens here and in developing countries know who is really behind companies and trusts. Without the financial secrecy which has wreaked such havoc to the global economy, tax evasion and avoidance would be much more difficult.”

Make Tax Fair:

When big firms don’t pay the tax they should, governments lack funds for schools, hospitals and tackling poverty. Tax dodging hurts us all, but it affects poor people the most. Developing countries lose three times more to tax havens than they receive in aid each year, according to the OECD. The money lost is enough to end world hunger twice over. We want the government to ensure Irish law and tax practice does not help companies or individuals to avoid tax by requiring companies to say publicly where profits are made and tax is paid and increase international tax cooperation.

Video: Inequality in Malawi

(Subtitled so you can watch without audio.)

Posted In:
,

‘If those corporations were paying their dues my friend would not have died’

Clockwise from left: Cecillia, Stella and Getrude - tax justice activists, campaigning to change the policies and structures that allow rich individuals and multinational companies to avoid paying the tax they owe. Photos: Mark Bushnell/Oxfam
 
Scandals like the recently released Panama Papers show the enormous lengths people, from government officials, big businesses, celebrities and the wealthy elite, will go to avoid paying tax. 
 
The whole world has been talking about the leaked documents and those named for tax dodging – often through perfectly legal loopholes that deny poor countries of billions needed for essential services like health and education. 
 
But there are also people going to extraordinary lengths to tackle the inequality that keeps people poor and to make tax fair for everyone. 
 
People like Ene Agbo from Nigeria, Cecillia Mulenga from Zambia, Gertrude Chirwa from Malawi and Stella Agara from Kenya but working in Malawi – four inspiring women who are taking on the tax dodgers and who we are delighted to be hosting in Ireland this weekend. 
 
The four activists are currently travelling around Europe meeting with the public, decision-makers and Oxfam supporters to share first-hand how tax dodging is harming people and communities. 
 
You are invited to join us in Dublin and Belfast to hear for yourself why tackling the global toxic tax system matters and to catch their contagious energy and passion for the fight against tax dodging.  
 
Cecillia told us: “You should be around in Zambia when we are doing campaigning – it’s one of the best days…!”
 
She has a very personal reason for getting angry about public funds lost to tax dodging. A good friend of hers died when she was eight months pregnant because there were no health facilities.  
 
Cecillia says: “If those corporations were paying their dues my friend would not have died. They would have built a hospital; they would have built a better road in that same area. That would have helped her and kept her alive.”

Meet Cecillia

Stella said the lengths some firms go to avoid paying tax in Malawi is mind-blowing: “It is the order of the day for small business to pay more tax than multinational companies, yet multinational companies are making billions out of Malawi,” she says. 
 
Stella believes that this corporate tax dodging is driving inequality in Malawi: “For me I have seen people enjoy very wealthy lives…and I have seen people who are very poor, who don’t ever put on shoes – that is when you have seen poverty.”

Meet Stella

Gertrude is 22 years old and raises awareness about tax injustice in the community, particularly with young people. She believes it’s down to ordinary citizens to do something about tax dodging. 
 
Gertrude says: “When I learnt about it, I got really angry and motivated at the same time…I need to do something about it, I need to make others also aware there are a lot of tax injustices happening in our country and that we can do something, particularly the youth.  
 
“What I say to the campaigners in the rest of the world is: let’s keep up the good work, let’s keep fighting for tax justice – if we don’t do it, then who will?”

Meet Gertrude

While the headlines and the hype can make tax dodging seem complex, it is refreshing to hear from real people with real passion about what is happening on the ground – and to realise we are all connected in a global push to take on the tax dodgers and make change for good. 
 

JOIN US:

 
 
 

LIVE STREAM:

 
If you can't make the events in Dublin or Belfast, we will be doing our first ever social media live stream talk and Q&A with these activists, on Facebook and Periscope, this Saturday (April 16) at 4pm. Keep an eye on our Facebook and Twitter for more info and to join our chat on Saturday.

Christine McCartney is a Campaigns and Advocacy Executive with Oxfam Ireland

Oxfam Ireland's tax justice project is funded by the European Union

Pages