Global inequality rises at a truly staggering rate and Ireland’s low tax regime is complicit | Irish Examiner

Global inequality rises at a truly staggering rate and Ireland’s low tax regime is complicit | Irish Examiner: "Oxfam, in the business of battling poverty worldwide for more than 70 years, says inequality is reaching new extremes despite massive growth in the global economy. But it is benefitting almost uniquely the rich, and even their club is getting smaller.

Part of the reason, the British-based charity shows, is that “tax is for little people”, with the wealthiest having $7.6tn (€6.98tn) salted away in tax havens — more than the combined gross domestic product of Britain and Germany.

Oxfam includes 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.

IMF data referenced in the report also shows that corporate investment in these tax havens increased by almost four times between 2000 and 2014.  This may come as something of a shock given the recent changes to the country’s tax rules, but Oxfam points out that, despite this, and the OECD devising new structures, not enough is changing and countries, including Ireland, have ensured new rules have been watered down.

The average yearly income of the poorest 10% has increased by less than $3 in the past 25 years. Close to half the overall growth in income went to the top 10%, while the bottom 10% got a miserable 0.6%.

“Far from trickling down, income and wealth are instead being sucked upwards at an alarming rate,” the report says. “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.”

But the money being sucked up by the top 1% is not just coming 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. The CEOs in top US companies 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.

This creates a spiral of inequalities, with women in particular falling behind even further, with poorer health care, education, political representation, and work compared to men. Even among the richest, women get less of the pie, with 445 of the richest 500 being men while, at the other end of the scale, women make up the majority of low-paid workers.

And as the rich get richer, they also get more powerful, persuading or dictating to governments the policies they want.

“Economic and policy changes over the past 30 years — including deregulation, privatisation, financial secrecy and globalisation, especially of finance — have supercharged the age-old ability of the rich and powerful to use their position to further concentrate their wealth,” the report states.

Our politicians have bought into the myth that low taxes for rich people and companies are needed to spur economic growth that will trickle down to all. With some countries acting as tax havens, it puts pressure on others 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.



 They analysed 200 companies and found that nine out of 10 have a presence in at least one tax haven, while, in 2014, corporate investment in these tax havens was almost four times more than it was in 2001.

The financial sector has grown most rapidly in recent years and now produces one in every five billionaires. The difference between what they pay themselves and the actual value their industry adds to the country is greater than in any other sector. Added to this is the fact that the majority of offshore wealth is managed by just 50 big banks.

Oxfam quotes a recent study by the OECD that is pertinent for Ireland, which shows countries with oversized financial sectors suffer greater economic instability and higher inequality.



 The report fingers another sector that is big in Ireland — pharmaceutical companies — and especially their use of monopoly and intellectual property to drive up prices. They lobby to keep their monopoly and, rather than putting the needs of the ill first, they orchestrate their business to create profit at almost any cost to others.

Oxfam found that pharmaceutical companies spent more than $228m lobbying in Washington in 2014 — which several examples show is money well spent, having convinced the US to pressure India, and the EU and the US pressured Thailand to step back from allowing generics to be produced at a fraction of the cost they were paying Big Pharma. Limits on governments’ ability to act for cheaper medicines is also being enshrined in free trade agreements."



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