The Guest Blog

By Àngela Corbalán, Oxfam’s Head of EU Communications,
Deputy Head of EU Office

As world leaders arrive in Davos for the first day of the World Economic Forum, storm clouds are gathering overhead. Skyrocketing global inequality has shone a flashlight onto the murky workings of global finance, with Davos becoming center stage this week of how to address this imbalance of power.

Ahead of this year’s conference, a new Oxfam study has shown how wide the chasm now is between the ‘haves’ and ‘have nots’. Wealth: Having It All and Wanting More demonstrates that if current economic trends continue, next year the wealthiest 1 per cent on the planet will own more than everyone else combined. This staggering imbalance of wealth is holding back the fight against poverty at a time when 1 in 9 people do not have enough to eat, and more than a billion people live on less than $1.25 a day. Extreme inequality used to be seen as a problem solely for developing countries, where presidential jets flew over slums and shanty towns. Now it affects us all.

World leaders such as US President Barack Obama, French President François Hollande and IMF chief Christine Lagarde have already spoken about the dangers runaway inequality can cause. Other European leaders must also take up the call. The EU should act to stem the torrent of wealth flowing from the poorest people in the world to the richest – starting with these three concrete steps.

Firstly, the EU must take decisive action to fight tax dodging both within Europe and beyond. Tax evasion and avoidance by large companies and wealthy individuals cost Europe at least €120 billion in lost tax revenue every year, not to mention the billions siphoned away from developing economies in desperate need of revenue to fund public services like health and education.

Secondly, the EU must support ambitious plans to fund the upcoming UN-backed Sustainable Development Goals, including a re-commitment to providing 0.7% of their annual GDP as overseas aid to developing countries. A new UN tax body is also badly needed to re-write the current unfair international tax rules that deprive poor countries of millions in revenue, and should be agreed at the third International Conference on Financing for Development in Addis Ababa, Ethiopia in July.

Finally, a mandatory register for European lobbyists must be set up to shed light on corporate practices that keep the cogs of global inequality spinning. Twenty per cent of billionaires have interests in the financial and insurance sectors, which spent €550m whispering into the ears of policy-makers in both Brussels and Washington in 2013. The pharmaceutical and healthcare sectors – also favorites of the super-rich – spent €500m lobbying both the EU and the United States in the same year.

Oxfam is concerned that the lobbying power of these industries is road blocking the major reforms needed to the global tax system, and giving stringent intellectual property rights priority over the health of the world’s poorest people.

Increasing evidence from many sources, including the International Monetary Fund, shows that economic inequality isn’t just bad for those at the bottom but also damages economic growth. Putting the brakes on extreme wealth inequality must happen now for everyone’s benefit, before the storm clouds really do come rolling in.

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