According to the Oxfam Report, the number of people living in poverty in South African has increased by 11% from 27.3 million in 2011 to 30.4 million in 2015. File photo: African News Agency (ANA)
According to the Oxfam Report, the number of people living in poverty in South African has increased by 11% from 27.3 million in 2011 to 30.4 million in 2015. File photo: African News Agency (ANA)

#WEF2019: Oxfam calls for wealth tax to balance inequality

By Dineo Faku Time of article published Jan 22, 2019

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JOHANNESBURG – As the world’s high-profile chief executives gather at Davos ski resort in Switzerland for the annual World Economic Forum, anti-poverty charity Oxfam said inequality was at record levels and called for a wealth tax to level the playing fields.

South Africa is one of the most unequal countries in the world, with a World Bank report showing last year that inequality had deepened since the dawn of democracy.

In its latest report titled “Public Good or Private Wealth”, released yesterday, Oxfam said the economy was broken with extreme poverty, while huge rewards went to those at the very top. 

The report also said the wealth of the world's billionaires increased by $900 billion (R12.43 trillion), or $2.5bn a day, in the last year, while the wealth of the poorest half of humanity, 3.8 billion people, fell by 11 percent.

“Billionaires now have more wealth than ever before. Between 2017 and 2018, a new billionaire was created every two days,” said the report, adding that wealth was becoming even more concentrated.

It also said last year that 26 people owned the same as the 3.8 billion people who make up the poorest half of humanity, down from 43 people the year before.

Mpiyakhe Dhlamini, a researcher at the Free Market Foundation, said the report contained the same flawed premise of previous reports, because it treated the notion of inequality and the notion of poverty as one of the same. Poverty and inequality are not the same thing, and the solutions to inequality are not the same things you do to solve poverty, he said.

He said inequality measured the difference in wealth between two or more individuals or groups. 

“There is great inequality between someone like Jeff Bezos, the richest man in the world today, and Bill Gates, who used to be the richest man. Poverty simply means that someone is incapable of providing for their own basic necessities. And this is a real problem in South Africa and abroad, a problem that needs to be solved.” 

The report also flagged tax evasion by the rich, saying the super-rich were hiding at least $7.6trln from the tax authorities, avoiding an estimated $200bn in tax revenues.

“While millions of refugees are refused a safe haven, the richest can buy citizenship in any one of a number of countries offering minimal taxes and scrutiny of their wealth,” the report said.

It painted a bleak picture for Africa, saying 30 percent of private wealth may be held offshore, denying governments on the continent an estimated $15bn in tax revenues.

“Multinational companies exploit loopholes in tax codes to shift profits to tax havens and to avoid taxes, costing developing countries an additional estimated $100bn of lost corporate income tax,” it said, adding that the impact of inequality was devastating and 262 million children would not be allowed to go to school. 

It recommended that countries provide universal free health care, education and other public services that also work for women and girls, to end inequality. It also called for an end to the under-taxation of rich individuals and corporations.

“Oxfam wants governments to increase taxes. Yet it's high taxes and regulation that have been retarding growth, especially in South Africa,” Dhlamini said.

Dick Forslund, a senior economist at Cape Town-based Alternative Information and Development Centre, said illicit outflows by big corporates were hampering South Africa's economic growth prospects.

“It is not only the government that gets hurt by companies avoiding tax, but it also hurts the wages of workers. Economic growth may not deal with poverty, but addressing structural inequality,” Forslund said.


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