Big business’ windfall profits rocket to “obscene” $1 trillion a year amid cost-of-living crisis; Oxfam and ActionAid renew call for windfall taxes

722 of the world’s biggest corporations together raked in over $1 trillion in windfall profits each year for the past two years amid soaring prices and interest rates, while billions of people are having to cut back or go hungry.

Analysis by Oxfam and ActionAid of Forbes’ “Global 2000” ranking shows they made $1.09 trillion in windfall profits in 2021 and $1.1 trillion in 2022, with an 89 percent jump in total profits compared to average total profits in 2017-2020. For this analysis, windfall profits are defined as those exceeding average profits in 2017-2020 by more than ten percent.

45 energy corporations made on average $237 billion a year in windfall profits in 2021 and 2022. Governments could have increased global investments in renewable energy by 31 percent had they taxed at 90 percent the massive windfall profits that oil and gas producers funneled to their rich shareholders last year. There are now 96 energy billionaires with a combined wealth of nearly $432 billion ($50 billion more than in April last year).

Food and beverage corporations, banks, Big Pharma, and major retailers also cashed in on the cost-of-living crisis that has seen more than a quarter of a billion people in 58 countries hit by acute food insecurity in 2022.

Extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.

• 18 food and beverage corporations made on average about $14 billion a year in windfall profits in 2021 and 2022, enough to cover the $6.4 billion funding gap needed to deliver life-saving food assistance in East Africa more than twice over. Oxfam estimates that one person is likely to die of hunger every 28 seconds across Ethiopia, Kenya, Somalia and South Sudan. Global food prices rose more than 14 percent in 2022.
  
• 28 drug corporations made on average $47 billion a year in windfall profits, and 42 major retailers and supermarkets made on average $28 billion a year in windfall profits.
  
• Nine aerospace and defense corporations raked in on average $8 billion a year in windfall profits even as 9,000 people die every day from hunger, much of that driven by conflict and war.

“People are sick and tired of corporate greed. It’s obscene that corporations have raked in billions of dollars in extraordinary windfall profits while people everywhere are struggling to afford enough food or basics like medicine and heating,” said Oxfam International interim Executive Director Amitabh Behar.

“Big business is gaslighting us all —they’re hiking prices to make monster profits, plundering people under the cover of a polycrisis.”

“A few increasingly dominant corporations are monopolizing markets and setting prices sky-high to line the pockets of their rich shareholders. Big Pharma, energy giants and big supermarket chains shamelessly fattened their profit margins throughout both the pandemic and cost-of-living crisis. Most worryingly —in the absence of regulation, including progressive taxation— governments have invited this,” Behar said.

There is a growing body of evidence that corporate profiteering is playing a significant role in supercharging inflation, echoing fears that corporations are exploiting the cost-of-living crisis to boost profits margins —a trend dubbed “greedflation” and “excuseflation”. Christine Lagarde, the President of the European Central Bank, suggested in May that corporations are engaging in “greedflation”, while the IMF last week published a study showing that corporate profits account for nearly half the increase in Europe’s inflation over the past two years.

Huge corporate profits have coincided with the degradation of pay and conditions for workers.

Oxfam estimates that top-paid CEOs across four countries enjoyed a real-term 9 percent pay hike in 2022, while workers’ wages fell by 3 percent. One billion workers in 50 countries took an average pay cut of $685 in 2022, a collective loss of $746 billion in real wages compared to if wages had kept up with inflation.

Oxfam and ActionAid are calling on governments to claw back gains driven by profiteering. A tax of 50 to 90 percent on the windfall profits of 722 mega-corporations could generate between $523 billion and $941 billion both for 2021 and 2022. This is money that could be used to help people struggling with hunger, rising energy bills and poverty in rich countries, and to provide hundreds of billions of dollars to support countries in the Global South. For example:

• An injection of $400 billion into the fund for loss and damage agreed to at COP27 last year. Loss and damage finance needs are urgent, with estimates saying that low- and middle-income countries could face costs of up to $580 billion annually by 2030. UN Secretary-General António Guterres has called on rich countries to impose windfall taxes on fossil fuel companies and redirect the money to vulnerable countries suffering worsening losses from the climate crisis.
  
• Cover the financing gap ($440 billion) to provide universal social protection coverage and healthcare to more than 3.5 billion people living in low- and lower- middle-income countries, and the financing gap ($148 billion) to provide universal access to pre-primary, primary and secondary education in these same countries. This would support the hiring of millions of new teachers, nurses and healthcare workers across the Global South.

“Enough is enough. Government policy should not allow mega-corporations and billionaires to profiteer from people’s pain. Governments must tax windfall profits of corporations across all sectors —and invest that money back in helping people and deterring future profiteering. They must put the interests of their great majorities ahead of the greed of a privileged few,” said ActionAid Secretary-General Arthur Larok.

“Taxing windfall profits is smart economic policy —it’s a very clear and direct source of money for development and tackling climate change. Piling more loans onto poorer countries is what makes absolutely no sense when debt is accelerating the climate crisis”.