The G7 must pursue windfall taxes on excess corporate profits including from those making huge returns from surging food and energy prices. The revenues can be used to fund an end to global hunger and to tackle climate change.
The G7 meets this week in Germany with the world in deep crisis. Developing countries, still reeling from the impact of COVID-19 with their populations not yet fully vaccinated, are now being bankrupted by rapidly rising food and energy prices. Billions of people are struggling to buy food and millions are now facing acute hunger and famine-like conditions.
Oxfam is calling on G7 leaders to set out a properly funded plan to tackle the global food crisis. They should also address their failure to get the whole world is vaccinated against COVID-19, despite promising to do so a year ago.
Rising interest rates in rich nations are fuelling the debt crisis, with many countries facing default or crippling repayments. In 2022 the debt servicing for the world’s poorest countries is estimated at US$43 billion. In 2021, debt represented 171 percent of all spending on healthcare, education and social protection combined for low-income countries. Oxfam is calling on the G7 to immediately cancel 2022 and 2023 debt payments for all the low and middle-income countries that require it.
New Oxfam research shows that a 90 percent windfall tax on the excess profits made by G7’s largest corporations during the pandemic could generate almost US$430 billion. This could fully fund the shortfalls on all existing humanitarian appeals and a 10-year plan to end hunger, while also raising enough for a one-off payment of over US$3,000 to the poorest 10 percent of the population of the G7 countries to help cover the rising cost of living.
The G7 are proposing a new initiative called the ‘Global Alliance for Food Security’ to be launched at the leaders’ summit. Although the plan is promising, they launched a similar plan in Germany in 2015 to reduce the level of hungry people by 500 million, by 2030, but have so far failed to deliver the funding promised for it.
“This global hunger crisis, coming on top of the pandemic, is catastrophic. The G7 have a chance to show ordinary people that they are on their side, and not that of the corporates and creditors making huge excessive profits from these multiple crises. The G7 must implement a coordinated initiative of windfall taxes and debt cancellation to fully fund an action plan to end world hunger,” said Oxfam International Executive Director, Gabriela Bucher.
The G7 need to double the amount of aid they provide for agriculture, food security and nutrition, amounting to an additional US$14bn per year. At the same time, they need to fully fund the US$46 billion United Nations global humanitarian appeal, which is less than 20 percent funded today.
Oxfam research shows that corporations in the energy, food and pharmaceutical sectors – where monopolies are especially common – are posting record-high profits, even as wages have barely budged and workers struggle with decades-high prices and COVID-19. The fortunes of food and energy billionaires have risen by US$453 billion in the last two years, equivalent to US$1 billion every two days. Five of the largest energy companies (BP, Shell, Total Energies, Exxon and Chevron) are together making US$2,600 profit every second. There are now 62 new food billionaires.
The Ukraine crisis has had a huge impact on food prices but these are fuelled by long-standing inequalities and failures in the global food system. Equally the COVID-19 pandemic and the climate crisis have deeply harmed the ability of poor people and poor nations to cope. Between April 2020 and December 2021, wheat prices had increased by 80 percent.
“Hunger thrives on inequality and inaction. Across all countries – as food and energy costs spiral – it is the poorest and most marginalized people who are faced with the most desperate choices. In the poorest countries, the cost-of-living crisis has become a test-of-survival. The G7 must react to the most fundamental of asks we can ever make of our political leaders – help to feed people and stop them dying,” Bucher said.
Agencies like Oxfam have been sounding the alarm about East Africa – where one person is likely dying of hunger every 48 seconds and the rains have recently failed again – but also in West Africa, which has been hit by its worst food crisis in a decade and where 27 million people are now going hungry. Hunger is stalking other countries too in Africa, the Middle East and Latin America – driven by inequality, climate change, the effects of COVID-19, conflict, poverty, and underinvestment in agriculture, aid and other essential services.
The G7 also needs to confront its failure to do its part in vaccinating the world against COVID-19. Just 18 percent of people in the poorest countries are fully vaccinated while the G7 have defended the monopolies of pharmaceutical corporations against allowing developing countries to manufacture their own vaccines. After years of delay, last week at the WTO ministerial, G7 nations forced through a deeply inadequate agreement on vaccines and intellectual property that will fail to support production in developing countries.
Vulnerable communities in lower-income countries are facing the worst consequences of the climate crisis. Emissions are rising, yet the targets offered by countries under the Paris Agreement to cut emissions to keep warming below the critical 1.5°C threshold are insufficient. Despite a call from last year’s UN climate summit to increase emission targets, the G7 have shown no willingness to heed the call.
Developed countries, including the G7, continue to miss their 2009 promise to provide the annual US$100 billion in climate finance for mitigation and adaptation for lower income countries. The G7 should commit to deliver on the goal set by COP26 to double their provision of adaptation financing by 2025 – to strengthen long-term resilience and address climate-induced hunger, and to make clear how they will do so.
Notes to editors
To calculate the excess profit tax, Oxfam looked at the profits of the companies listed on the Forbes 2000 list of the largest companies in the world based on sales, profits, assets, and market value. The database was accessed from an open dataset repository (2017-2021 and 2022), which was then spot checked and cleaned to the best of our ability, for example by standardising naming conventions. The companies who are based in G7 countries, that have been on the list from 2017-2022, and made a profit for each of those years, were selected and the average profit between 2017-2020 (considered the pre-pandemic period as the data cut off is in April) were subtracted from the average 2021-2022 profits to give an excess profit total. Only those who increased their profit above 10 percent of their pre-pandemic average were included. In total there are 360 companies in the cohort.
The total excess profit is US$477,226,450,000 which taxed at a 90 percent rate would create US$429,503,805,000 in revenue. According to the UN OCHA Financial Tracking Service there is a US$37 billion funding shortfall in humanitarian appeals. According to the Ceres2030: Sustainable Solutions to End Hunger report, which sets out a 10-year plan to eradicate hunger, an additional US$330 billion is needed over 10 years and that the donor funding gap over this period is US$140 billion. The population of G7 countries is 770 million, according to the UN. A one-off payment of US$3,253 to the poorest 10 percent would cost US$253 billion.