Food corporations profiting during inflation and war should pay windfall tax, flags Oxfam

16 Jan 2023 --- Charity organization Oxfam is calling for “a systemic and wide-ranging increase in taxation of the super-rich to claw back crisis gains driven by public money and profiteering.” The company now wants this to include big food corporations and is calling on food businesses which have profited while inflation bites, to face a tax. 

The charity’s report underscores that wealthy corporations are using the Ukraine war as an excuse to pass on even bigger price hikes and is targeting food businesses. The report “Survival of the Richest” has been published today on the opening day of the World Economic Forum in Davos, Switzerland. 

Some countries’ governments have turned to taxing fossil fuel companies’ windfall profits as Russia's war in Ukraine sent oil and natural gas prices soaring last year, adding further strain to global household finances. 

Oxfam would like to see this go further to include big food corporations as a way to narrow the gap between the rich and poor.

Oxfam would like to see this go further to include big food corporations as a way to narrow the gap between the rich and poor.The charity’s report underscores that wealthy corporations are using the war as an excuse to pass on even bigger price hikes. 

Food and energy are among the industries dominated by a small number of players that have effective oligopolies, and the lack of competition allows them to keep prices high, the group highlights. 

Portugal has already acted, with the introduction of a windfall tax on both energy companies and major food retailers, including supermarket and hypermarket chains. It took effect at the start of this month and will be in force for the entirety of 2023.

Billionaire fortunes are increasing by US$2.7 billion a day, even as at least 1.7 billion workers now live in countries where inflation is outpacing wages. 

According to the Oxfam report, the richest 1% grabbed nearly two-thirds of all new wealth worth US$42 trillion created since 2020, almost twice as much money as the bottom 99% of the world’s population. 

Decades of tax cuts for the richest and for corporations have fueled inequality, with the poorest people in many countries paying higher tax rates than billionaires, the charity has flagged. 

Best decade for the “super-rich”
During the past decade, the wealthiest 1% has captured around half of all new wealth, it underscores. 

A wealth tax of up to 5% on the world’s multi-millionaires and billionaires could raise US$1.7 trillion annually, enough to lift 2 billion people out of poverty.

“While ordinary people make daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams. Just two years in, this decade is shaping up to be the best yet for billionaires – a roaring ‘20s boom for the world’s richest,” explains Gabriela Bucher, executive director of Oxfam International.

“Taxing the super-rich and big corporations is the door out of today’s overlapping crises. It’s time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else. Forty years of tax cuts for the super-rich have shown that a rising tide doesn’t lift all ships – just the superyachts.”

Billionaires have seen extraordinary increases in their wealth. During the COVID-19 pandemic and cost-of-living crisis, US$26 trillion (63%) of all new wealth was captured by the wealthiest 1%, while US$16 trillion (37%) went to the rest of the world. 

A billionaire gains roughly US$1.7 million for every US$1 of new global wealth earned by a person in the bottom 90%. Billionaire fortunes have increased by US$2.7 billion a day. This comes on top of a decade of historic gains – with the wealth of billionaires doubling over the last ten years.Billionaire wealth surged in 2022 with rapidly rising food and energy profits.

Rising food and energy costs highlighted 
Billionaire wealth surged in 2022 with rapidly rising food and energy profits. The report shows that 95 food and energy corporations more than doubled their earnings in 2022. 

They made US$306 billion in windfall profits and paid out US$257 billion (84%) to wealthy shareholders. 

The world’s hungry populations
Meanwhile, at least 1.7 billion workers live in countries where inflation is outpacing wages, and over 820 million people – roughly one in ten people on Earth – are going hungry. 

Women and girls often eat the least and last and make up nearly 60% of the world’s hungry population. 

The World Bank says we are likely seeing the most significant increase in global inequality and poverty since WW2. Entire countries face bankruptcy, with the poorest countries now spending four times more repaying debts to rich creditors than healthcare. 

Further, three-quarters of the world’s governments are planning austerity-driven public sector spending cuts – including on healthcare and education – by US$7.8 trillion over the next five years. 

Edited by Elizabeth Green