Oxfam reports growing inequality
Oxfam have reported that 62 people possess the same wealth as half of the global population, sparking debate on the growing inequality in the world. This highlights that wealth is becoming increasingly concentrated, with the wealthiest 62 people in the world holding $1.76 trillion, up 44% from 2011, and the poorest 3.6 billion people losing 41%.
These statistics emphasise the issues embedded in the global economy which is standing as a largely skewed system favouring deregulation, privatisation and financial secrecy. Tax avoidance and the use of tax havens by large corporations are leading to this growing inequality. The ABC noted that in 2013-14, Australia’s top 856 firms paid between 0 and 1% tax as a percentage of their quarterly income. For example, companies such as Apple paid approximately $74 million in tax which only accounts for 1% of their total income, and Google paying only $9 million in taxes.
These large businesses are able to avoid tax through taking advantages of tax loopholes. Profits are moved to countries with low taxes, also known as tax havens, whereas debts and losses are carried over to countries with high tax rates. This allows companies to claim a tax deduction against the reported debts in certain countries, thereby lowering their taxable income.
While tax avoidance may not be seen by many as an overwhelming global issue, it is a large part of the reason why the rich are getting richer. In order to be deemed amongst the world’s wealthiest 50% of people in 2015, you only need a net worth of $4,400. While it should be acknowledged that the number of people living below the poverty line has halved between 1990 and 2010, this is still an alarming statistic as an extra 200 million people would have been able to escape poverty in the last year alone had the richest 1% of the population not received half of the increase in global wealth.
There are other factors causing the growing inequality, such as gender pay differences, people being paid minimum wage as opposed to a living wage, and the tax burden being placed on labour and consumption rather than on wealth and capital. However, with the alarming number of companies avoiding tax in Australia alone in 2014, action needs to be taken to ensure that governments are able to recover the multitudes of money lost in tax havens annually so that this can be utilised in ways that will benefit the lives of the world’s poorest.