The Future is Equal

Your questions answered: Oxfam’s Inequality Index

A computer classroom in Oneputa Combined School, northern Namibia. The Namibian government is committed to reducing inequality and secondary education is free for all students. Photo: John Hogg/World Bank

The Commitment to Reducing Inequality Index ranks 152 governments on their policies in three areas critical to reducing the gap between rich and poor: social spending, progressive taxation and labour rights.

Since the index was launched many people have been in touch to find out more – our response to some of the most common comments and questions are outlined below.

Why is Oxfam talking about inequality – shouldn’t it be focused on tackling poverty?

Extreme inequality is trapping millions of people in poverty and must be stopped. The World Bank estimates that 700 million fewer people would have been living in poverty at the end of last decade if action had been taken to reduce the gap between rich and poor. The World Bank has also been clear that there will be no way we can meet the global goal to eliminate extreme poverty unless we redouble efforts to tackle inequality.

My country isn’t ranked correctly.

As a global tool, the index only offers an indication of how well governments are tackling inequality – it doesn’t provide a comprehensive assessment.

The index focuses on taxation, social spending and labor rights because there is widespread evidence that progressive action in these areas can significantly reduce inequality. However, it does not include all policies that have an impact on inequality. For example, it doesn’t look at the distribution of land ownership or the extent to which a country operates as a tax haven. We hope to expand the indicators in future editions of the index and this could have a significant impact on the rankings of some countries. For example, Belgium would fall down the rankings if its role as a tax haven was assessed by the index.

The index is based on the most up to date data that is available from governments and international institutions however it will miss very recent developments. Several countries including Argentina and France have recently made cuts in social spending or corporate taxes which are not reflected in the index – they can expect to slip down the ranking in the next edition of the index.

This is left-wing propaganda.

Oxfam is a non-party political organization. However, we have a duty to draw attention to government action and inaction across the globe that is exacerbating poverty and inequality.

The index focuses on taxation, social spending and labor rights because there is widespread evidence that progressive action in these areas can significantly reduce inequality. For example, collective bargaining by trade unions typically raises members’ wages by 20 percent and drives up market wages for everyone.

Why isn’t my country included in the index?

Some countries have been excluded from the index because there was either insufficient data or major question marks about the quality of the data available. The extremely poor level of public data available for some countries on policies relevant to reducing inequality is a cause for serious concern -, especially in the Middle East. Oxfam is calling for governments to address this data gap.

My country is ranked towards the top of the index – does that mean all is well?

The index ranks countries in relation to each other. This means countries at the top of the index are doing better at tackling inequality than countries further down but it doesn’t mean they are doing everything they could be tackle inequality.

Even Sweden, Belgium and Denmark which top the index can do more. Sweden’s low corporate tax rates benefit wealthy business while its high rate of VAT disproportionately impacts the poorest, Belgium’s corporate tax incentives allow big business to avoid paying their fair share, and Denmark has cut taxes for its wealthiest citizens. Denmark and Belgium have also cut social welfare for their poorest and most vulnerable citizens.

Overall the index found that 112 out of the 152 countries assessed are doing less than half of what they should be doing to tackle inequality in the three policy areas assessed by the index.

What is Oxfam calling for?

The index shows that inequality is not inevitable. It is a policy choice. Government choices matter when it comes to tackling inequality.

Oxfam is calling for all governments to do more to tackle inequality by increasing and improving social spending, building fairer tax systems, and ensuring workers – especially women workers – are better paid and better protected.

Governments must also work with international institutions to improve the quality and quantity of publicly available data on inequality levels in a country and the policies that governments are taking to tackle it.

A key thing the New Zealand government must do right now is crush tax avoidance by multinationals. Our broken tax system means big companies can legally avoid paying a lot of tax in New Zealand, and it’s depriving our social services of millions of dollars each year.

We need you to join us in telling our Minister of Revenue, Judith Collins, that we want our tax policies cleaned up to keep public spending money in New Zealand and to close the gap between the rich and the poor.

Sign the petition