A newly released report from the charity Oxfam says that just 62 people own the same as half the population of the planet.
It also lists Ireland as one of 10 regimes that allow wealthy individuals and massive multinational corporations to avoid paying out the same percentage of their income in taxes as ordinary citizens. It is estimated that globally a total of $7.6trn is stashed in offshore accounts and this deprives governments around the world of $190bn in tax revenues each year.
According to the British charity the wealth of the poorer half of the world’s population has dropped by 41 per cent to €1.6 trillion since 2010. This news comes ahead of the annual World Economic Forum meeting in Davos this week which will be attended by Taoiseach Enda Kenny. Alarmingly, the wealth gap is also widening faster than anyone anticipated, with the 1 per cent overtaking the rest one year earlier than Oxfam had predicted in their report last year.
Oxfam’s executive director Winnie Byanyima, who will again attend Davos having co-chaired last year’s event, said:
“It is simply unacceptable that the poorest half of the world’s population owns no more than a few dozen super-rich people who could fit onto one bus.
“I challenge the governments, companies and elites at Davos to play their part in ending the era of tax havens, which is fuelling economic inequality and preventing hundreds of millions of people lifting themselves out of poverty.
Multinational companies and wealthy elites are playing by different rules to everyone else, refusing to pay the taxes that society needs to function. The fact that 188 of 201 leading companies have a presence in at least one tax haven shows it is time to act.”
That report says that “far from trickling down, income and wealth are instead being sucked upwards at an alarming rate. Once there, an ever more elaborate system of tax havens and an industry of wealth managers ensure that it stays there, far from the reach of ordinary citizens and their governments.”
The money being sucked up by the top 1% is not only being taken from the poor, but also from ordinary workers as they receive less of what they help create, while more of it goes to the owners of capital and the men at the top. American CEOs have had a pay rise of more than 54% in the past five years, while ordinary wages have barely moved despite big increases in labour productivity.
As the rich get richer, they also get more powerful, persuading or dictating to governments the policies they want.
Irish politicians have sold us the myth that low taxes for rich people and large multi national companies are needed to spur economic growth that will “trickle down” to everyone. Because countries like Ireland act as a tax haven, it puts pressure on countries to lower taxes on businesses and the rich in what Oxfam describes as a “relentless race to the bottom”.
It feeds into a cycle of doom, as fewer taxes mean fewer services, with higher indirect tax such as Vat hitting the poorest most. And tax avoidance is rapidly getting worse, says Oxfam.
Oxfam quote a recent study by the OECD that rings alarm bells for Ireland. It found that countries with oversized financial sectors suffer greater economic instability and higher inequality.
“The current system did not come about by accident; it is the result of deliberate policy choices, of our leaders listening to the 1% and their supporters rather than acting in the interests of the majority. It is time to reject this broken economic model,” Oxfam says.
It is calling for an end to tax havens as a priority; workers to be paid a living wage; promotion of women’s economic equality; the influence of powerful elites to be kept in check; a change in the global system for R&D and the pricing of medicines; a fairer sharing of the tax burden and progressive public spending to tackle inequality.
We don’t have to look to far in this country for examples of the inequality Oxfam are talking about. Last year Denis O’Brien, Ireland’s richest businessman and a tax exile, more than doubled his money in two years with the €450 million sale of Topaz. He had bought its loans from IBRC for €150 million, before topping it up with the €75 million add-on of Esso.
After being vigorously questioned by Independent TD Catherine Murphy last year, Minister for Finance Michael Noonan revealed that the Department of Finance were concerned about the 2012 sale of Siteserv, a bust building services company, to O Brien by IBRC for for €45 million.
Included in the deal was a €105 million debt write-off for Siteserv by the State bank, which made many question why O’Brien had got such a sweet deal.
A Government-ordered inquiry into IBRC debt write-off deals such as Siteserv has since become bogged down in legal difficulties and is in danger of being scuppered. What this says about equality in Ireland is open for debate.