Toward an international movement to tackle inequality

12 February, 2014 | General

International agreement on the need to take action against rising and damaging economic inequality is gathering pace.

We have a shared agenda – now what’s needed is a shared plan of action.

Each nation and region has its own circumstances, and there is no one-size fits-all solution. But we know that in countries which have successfully reduced inequality, progressive taxation has been an important tool, enabling governments to invest in good quality health care and education for their poorest citizens.

Tackling tax havens

In the last 30 years, an expanding global network of tax havens has hidden huge amounts of wealth - we conservatively estimate $18.5 trillion is held offshore. This is largely untaxed, holding back billions that could be spent on tackling poverty and boosting economies.

This network of secrecy also facilitates the draining of large amounts of capital from the poorest countries. Some $950 billion left developing countries in 2011 in illicit financial flows. It is estimated that between 2008 and 2010, sub-Saharan Africa lost on average $63.4bn in this way each year – almost exactly the financing gap between what 20 poor countries have and what they need to meet the Millennium Development Goals. 

At the same time, the ‘race to the bottom’ effect of very low tax jurisdictions has further contributed to ever-lower corporate and personal tax rates for the richest individuals and corporations. In Zambia for example, copper exports in 2011 generated $10 billion, while government revenues from the resource were just $240 million – this in a country where more than two-thirds of people live in extreme poverty.

Time for action

Last year, acknowledging that for prosperity to be sustained it must be shared more equally, the G20 endorsed a plan to clamp down on tax dodging by multinational corporates. Now leaders must get down to the work.

New global rules on corporate tax dodging are needed. Making inequality reduction a measure of progress alongside GDP growth is important. And investing in high-quality public health and education services will be crucial investments in productivity and a more equal world.

Cartoon by Horacek on inequality

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Working for the Few: Inequality and the threat to democracy

Capturing Africa's missing billions and making it work for its people

See also:

3 ways tax justice can help close the inequality gap

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