Wealth inequality: properly taxing the global ultra-rich could lift two billion out of poverty, Oxfam says

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In the UK, the richest 1% of people hold more wealth than 70% of the country

An annual wealth tax on the world’s multi-millionaires and billionaires could raise more than £1 trillion per year and lift two billion people out of poverty, a group of charities and think tanks has claimed.

Oxfam has warned that wealth inequality is getting worse globally, with the richest 1% increasing their wealth by £21 trillion since 2020, almost twice as much as the remaining 99% of the world population.

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As workers globally suffer from rising inflation, with food and energy prices disproportionately impacting the poorest, new research suggests corporate profits have played a major part in driving inflation in the UK.

Half of inflation drive by corporate profits

A new report by Oxfam highlights the alarming rise in global wealth inequality in recent years, on the eve of the World Economic Forum in Davos.

In the UK, the combined wealth of the four richest individuals is more than that of 20 million people, while the richest 1% hold more wealth than 70% of the country.

In the last two years, around £34 trillion of new wealth was created globally, but around two thirds of this (63%) was collected by the richest 1% of the world population - meaning that billionaires gained around £1.4 million for every 80p earned by an individual in the bottom 90%.

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In the last decade the number of billionaires has doubled, as has their collective wealth as an economic class. Much of this growth has come in the last two years, with billionaires increasing their wealth by £2 billion per day over that period.

The rapid increase in the collective wealth of the world’s rich has taken place alongside historic increases in inflation, with 1.7 workers around the globe now living in countries where inflation is outpacing wages.

Research by Oxfam has found that excess profits have driven at least half of inflation in the UK, as well as Australia and the US. There are 95 food and energy companies that more than doubled their profits in 2022, up to £251 billion in total, with 84% of that paid out to shareholders.

Danny Sriskandarajah, Oxfam GB chief executive said “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 going hungry but for billionaires, every day is a bonanza.

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“Multiple crises have pushed millions to the brink while our leaders fail to grasp the nettle - governments must stop acting for the vested 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? A flour seller Oxfam works with in Uganda pays 40 per cent tax each month, while some billionaires’ true tax rates have been as low as three per cent. Governments must introduce higher taxes on the super-rich now.”

‘The wealthiest must contribute more’

Oxfam’s Survival of the Richest report highlights that half the world’s billionaires live in countries with no inheritance tax for direct descendants, meaning they will pass on as much as £4 trillion tax-free to their heirs when they die.

A new of charities and think tanks are calling for tax regimes to be reformed to combat wealth inequality, with taxes on the wealthiest gradually declining in the last few decades, as taxes which disproportionately fall on the poorest - such as VAT - increasing.

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According to new analysis by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam and the Patriotic Millionaires, an annual wealth tax of up to five per cent on the world’s multi-millionaires and billionaires could raise $1.7 trillion a year (£1.4 trillion). The group say this would be enough to lift two billion people out of poverty.

Ian Gregg, former managing director of Greggs and the son of its founder, is a supporter of Patriotic Millionaires UK and Tax Justice UK, who are campaigning for a wealth tax in the UK.

He said: “I can never be happy with an economy that fosters such division in society for our children and grandchildren. Now, more than ever, the wealthiest must contribute more. For me, paying more tax would be a small price to pay to start the process of making society fairer, and reducing inequalities in both wealth and opportunity.”

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