Inequality – what is it good for?

Barbara is from Zambia – one of the ten fastest growing economies in the world. But like 64 per cent of the country, Barbara lives in extreme poverty.

Before she lost her husband to cancer, Barbara had to sell livestock to pay for his treatment. Now she spends four hours walking every day to collect water for her crops, so she can feed her two children.

Inequality is one of the defining issues of our time

Today, 62 individuals have the same wealth as the poorest half of the world. That’s just 62 mega-rich individuals compared to 3.6 billion people.

We now live in a world where the richest 1% have accumulated more wealth that the rest of the planet combined. Oxfam’s newest report, An Economy for the 1%, finds that, far from trickling down, income and wealth is being sucked upwards at an alarming rate, out of the reach of ordinary people.

The global inequality crisis is reaching new extremes, and it’s bad news for us all. Yet the consequences for the world’s poorest people are particularly severe. Rising economic inequality makes existing inequalities worse. Countries with higher income inequality also tend to have larger gaps between women and men in terms of health, education, labour market participation, and representation in parliaments.  

Aren’t we all supposed to pay taxes?

Tax is an essential tool to help end extreme inequality, and could help lift millions of people out of poverty. Tax revenues collected by governments here and around the world are key to providing the basics for everyone – like healthcare, education and transport infrastructure. We all rely on the public services funded by tax.

But taxation is not working as it should.  As taxes go unpaid due to widespread avoidance, government budgets feel the pinch, which in turn prevents them from delivering these vital services.

It’s time to end tax havens

One way multinational corporations and wealthy individuals avoid paying their fair share of tax is through the use of tax havens – a jurisdiction or territory that allows high levels of secrecy and/or a disproportionately low tax rate.

Developing countries lose at least US$170 billion in tax revenues each year, because of the vast amount of money hidden in elaborate offshore tax havens. Poorer countries in particular suffer the worst consequences – they are deprived of funds needed to tackle poverty, put children in school and prevent people dying from curable diseases. 

Barbara never had the chance to go to school. If she had, she would have liked to be a nurse or a teacher. Her son doesn’t go to school either, because she can’t afford the registration fees. She knows that things could be different. If everyone paid their fair share of tax, we could have a chance to meet the basic needs of people living in poverty, give them control over their own lives and the opportunity to change their futures.

Inequality is not inevitable

Our world is not short of wealth. It simply makes no economic sense – or indeed moral sense – to have so much in the hands of so few. The fight against poverty will not be won until the inequality crisis is tackled.

Help end the era of tax havens: take action now