Growing inequality means that the world’s wealthiest 62 people own as much as the poorest half of the planet’s population – some 3.6 billion people – according to a new report from Oxfam.
The richest 1% – around 73 million out of the world’s 7.3 billion people – now own as much as everyone else put together, said the report, published ahead of the annual World Economic Forum of global political and business leaders in Swiss ski resort Davos.
Oxfam said urgent action was needed to tackle the “inequality crisis” and called on world leaders – including Prime Minister David Cameron – to take action to crack down on tax-dodging by the rich, which denies governments in the developing world billions of pounds a year which could be used on health, education and anti-poverty measures.
Mr Cameron promised in a speech in Davos three years ago to get tough on avoidance, warning corporate tax-dodgers to “wake up and smell the coffee”.
But Oxfam said that promised measures to increase transparency in British Overseas Territories and Crown Dependencies, such as the Cayman Islands and British Virgin Islands, have not yet been implemented. While the UK has made good on Mr Cameron’s promise to introduce public registers of companies’ owners, only one overseas territory – Montserrat – has followed suit.
The report found that the gap between rich and poor had widened “dramatically” over the past 12 months. As recently as 2010, the combined wealth of the 388 richest people was needed to equal that of the poorest half of the world, but that number has since plummeted to 80 last year and 62 now.
The total wealth of the poorest half of the world fell by a trillion US dollars (£694bn) since 2010 even though the actual number of people in this group rose by 400 million, said the report, An Economy for the 1%. Meanwhile, the wealth of the super-rich 62 rose by more than half a trillion dollars over the same period to 1.76 trillion (£1.22 trillion). This equates to an average of around £20 billion for each of the 62, who include just nine women.
Although the number of people living in extreme poverty halved between 1990 and 2010 globally, the average annual income of the poorest 10% has increased by less than three dollars (£2.08) a year over the past 25 years.
Oxfam said action on tax should form part of a three-pronged approach, alongside increased investment in public services and action to boost the income of the lowest paid – with priority given to ending the era of tax havens. Allowing governments to collect tax owed is “vital” to meeting the new international development goal of eliminating extreme poverty by 2030, the charity said.
Oxfam GB chief executive Mark Goldring said: “It is simply unacceptable that the poorest half of the world population owns no more than a small group of the global super-rich – so few, you could fit them all on a single coach.
“World leaders’ concern about the escalating inequality crisis has so far not translated into concrete action to ensure that those at the bottom get their fair share of economic growth. In a world where one in nine people go to bed hungry every night we cannot afford to carry on giving the richest an ever bigger slice of the cake.
“Tackling the veil of secrecy surrounding the UK’s network of tax havens would be a big step towards ending extreme inequality. Three years after he made his promise to make tax dodgers ‘wake up and smell the coffee’, it is time for David Cameron to deliver.”
Globally, the super-rich are estimated to have a total of 7.6 trillion dollars (£5.3trn) stashed in offshore accounts, depriving governments around the world of 190 billion dollars (£132bn) in tax revenues each year, said the report.
As much as 30% of all African financial wealth is believed to be held offshore, costing 14 billion dollars (£9.7bn) in lost tax revenue each year – enough to save four million children’s lives a year through improved healthcare and employ enough teachers to get every African child into school – said Oxfam.
Nine out of ten WEF corporate partners have a presence in at least one tax haven and it is estimated that tax dodging by multinational corporations costs developing countries at least 100 billion dollars (£69bn) a year, said Oxfam. Corporate investment in tax havens increased almost quadrupled between 2000 and 2014.
Mr Goldring said: “Ending extreme poverty requires world leaders to tackle the growing gap between the richest and the rest which has trapped hundreds of millions of people in a life of poverty, hunger and sickness.
“It is no longer good enough for the richest to pretend that their wealth benefits the rest of us when the facts show that the recent explosion in the wealth of the super-rich has come at the expense of the poorest.”