Oct 11, 2022
Cuts to key social services combined with a failure to raise taxes on the wealthy and large corporations throughout the Covid-19 pandemic has unleashed a global "inequality explosion," according to a new index published Tuesday.
Produced by Oxfam and Development Finance International (DFI), The Commitment to Reducing Inequality Index 2022 finds that most governments are doing little to combat income and wealth inequities that have become even more extreme during the coronavirus crisis, which has disproportionately impacted poor nations.
"Most governments have completely failed to take the steps needed to counter the inequality explosion created by Covid-19."
"Despite the biggest global health emergency in a century, half of low- and lower-middle-income countries cut health spending during the pandemic," the report notes, with many poor nations forced into austerity by their massive debt burdens.
"Despite widespread destitution caused by the pandemic, half of the countries tracked by the [inequality index] actually cut social protection spending, and 70% cut education spending," the report adds. "Despite big losses in tax revenue and huge increases in the wealth of the richest people and corporations during the pandemic, 143 countries out of 161 failed to increase taxation of the richest people, and 11 countries inexcusably cut taxes on rich people."
Among the countries that have cut taxes for the richest during the pandemic are Armenia, Barbados, and Croatia, the report observes.
Oxfam and DFI note that the refusal to hike taxes on billionaire and corporate pandemic profiteers during the deadly Covid-19 emergency stands in stark contrast to government actions during past times of crisis.
"During World War Two," the report notes, "the United States pushed up tax rates on the richest people to over 90%, to help pay for the war effort, and taxes were also levied on the excessive windfall profits of corporates."
The new research ranks the U.S. 28th among 161 world governments on its commitment to reducing inequality (CRI) index. Norway was ranked first due to its strong welfare system and labor protections.
Gabriela Bucher, Oxfam International's executive director, said the index overall makes clear that "most governments have completely failed to take the steps needed to counter the inequality explosion created by Covid-19."
"They ripped away public services when people needed them most," Bucher added, "and instead left billionaires and big corporations off the hook to reap record profits."
While there's much to lament about nations' pandemic-era economic policies, Bucher said that "there is some good news of valiant governments from the Caribbean to Asia bucking this trend, taking strong steps to keep inequality in check."
Oxfam highlighted several examples:
- Costa Rica put up its top income tax by 10%, and New Zealand by 6%;
- The Occupied Palestinian Territory increased its social spending from 37 to 47% of its entire budget; and
- Barbados introduced a comprehensive set of laws to improve women's labor rights, and the Maldives introduced its first national minimum wage.
The new research was released as government finance ministers gathered in Washington, D.C. for the International Monetary Fund (IMF) and World Bank's week-long annual meeting, a gathering of elites that comes amid worsening costs-of-living crises mounting fears of a global recession induced by central banks' aggressive interest rate hikes.
"Inequality is a policy choice, governments must stop putting the richest first, and ordinary people last."
Oxfam and DFI, which are pushing for higher taxes on the rich and corporations to help bolster spending on critical social services, argued Tuesday that "economic inequality and poverty in poor countries are further exacerbated by the IMF's insistence on new austerity measures to reduce debts and budget deficits."
"The debate has catastrophically shifted from how we deal with the economic fallout of Covid-19 to how we reduce debt through brutal public spending cuts and pay freezes," warned DFI director Matthew Martin. "With the help of IMF, the world is sleepwalking into measures that will increase inequality further."
"We need to wake up and learn the lessons; preventing huge increases in inequality is completely practical, and common sense," Martin said. "Inequality is a policy choice, governments must stop putting the richest first, and ordinary people last."
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