Billionaire fortunes grew by US$2.5 billion a day last year as poorest saw their wealth fall
Billionaire fortunes increased by 12 per cent last year – or US$2.5 billion a day - while the 3.8 billion people who make up the poorest half of humanity saw their wealth decline by 11 per cent, reveals a new report from Oxfam today. The report is being launched as political and business leaders gather for the World Economic Forum in Davos, Switzerland.
‘Public Good or Private Wealth’ shows the growing gap between rich and poor is undermining the fight against poverty, damaging our economies and fuelling public anger across the globe. It reveals how governments are exacerbating inequality by underfunding public services, such as healthcare and education, on the one hand, while under taxing corporations and the wealthy, and failing to clamp down on tax dodging, on the other. It also finds that women and girls are hardest hit by rising economic inequality.
Winnie Byanyima, Executive Director of Oxfam International, said:
‘The size of your bank account should not dictate how many years your children spend in school, or how long you live – yet this is the reality in too many countries across the globe. While corporations and the super-rich enjoy low tax bills, millions of girls are denied a decent education and women are dying for lack of maternity care.’
The report reveals that the number of billionaires has almost doubled since the financial crisis, with a new billionaire created every two days between 2017 and 2018, yet wealthy individuals and corporations are paying lower rates of tax than they have in decades.
- Getting the richest one per cent to pay just 0.5 per cent extra tax on their wealth could raise more money than it would cost to educate the 262 million children out of school and provide healthcare that would save the lives of 3.3 million people.
- Just four cents in every dollar of tax revenue collected globally came from taxes on wealth such as inheritance or property in 2015. These types of tax have been reduced or eliminated in many rich countries and are barely implemented in the developing world.
- Tax rates for wealthy individuals and corporations have also been cut dramatically. For example, the top rate of personal income tax in rich countries fell from 62 per cent in 1970 to just 38 per cent in 2013. The average rate in poor countries is just 28 per cent.
- In some countries, such as Brazil, the poorest 10 per cent of society are now paying a higher proportion of their incomes in tax than the richest 10 per cent
At the same time, public services are suffering from chronic underfunding or being outsourced to private companies that exclude the poorest people. In many countries a decent education or quality healthcare has become a luxury only the rich can afford. Every day 10,000 people die because they lack access to affordable healthcare. In developing countries, a child from a poor family is twice as likely to die before the age of five than a child from a rich family. In countries like Kenya a child from a rich family will spend twice as long in education as one from a poor family.
Cutting taxes on wealth predominantly benefits men who own 50 per cent more wealth than women globally, and control over 86 per cent of corporations. Conversely, when public services are neglected poor women and girls suffer most. Girls are pulled out of school first when the money isn’t available to pay fees, and women clock up hours of unpaid work looking after sick relatives when healthcare systems fail. Oxfam estimates that if all the unpaid care work carried out by women across the globe was done by a single company it would have an annual turnover of US$10 trillion – 43 times that of Apple, the world’s biggest company.
Inequality is not only found in developing regions, but also in financial hubs like Hong Kong.
In fact, just as Oxfam Hong Kong recently pointed out in their ‘Hong Kong Inequality Report’, inequality in Hong Kong is alarming. The city’s Gini coefficient in 2016 (based on original monthly household income) stood at 0.539 – the highest in 45 years, and the Gini coefficient in the same year based on post-tax post-social transfer monthly household income was 0.473. Further, the city’s wealth gap is one of the most extreme among developed economies, including Canada (0.318), United Kingdom (0.351), United States (0.391), Singapore (0.356) and Australia (0.337).
The number of billionaires has soared since the financial crisis, and Hong Kong has become a microcosm of this global phenomenon. In 2008, there were 26 billionaires who had a combined wealth of HK$135.3 billion, and in 2018, there were 67 billionaires who owned a total of HK$334.7 billion. In last year alone, their wealth increased by 23.5 per cent. According to Oxfam’s ‘Hong Kong Poverty Situation Report 2017’, however, before factoring in government intervention, more than 1.37 million people in Hong Kong live below the poverty line.
While the number of billionaires continues to climb, the average waiting time for a public rental housing unit is at a record high: in Septmeber 2018, the waiting time stood at a staggering 5.5 years. Further, patients must now wait up to 78 weeks – or one and a half years – to see a specialist at a public hospital. The average waiting time for Care-and-Attention places and Nursing Home places is also 20 and 26 months respectively. Moreover, on average, only 1 in 148 children aged 0-2 received an aided full-day child care service place in 2016. With insufficient public services available, the poor in Hong Kong are placed at an even greater disadvantage.
Hong Kong, however, has the means to do better. The Hong Kong government has accumulated more than HK$690 billion in surplus, meaning its total fiscal reserves have surpassed the HK$1.1 trillion mark. As such, Oxfam is calling on the government to make progressive policy changes to address poverty, build a human economy and reduce inequality by increasing recurrent expenditure by HK$36.7 billion. This should be spent on public services to benefit citizens and paying their outsourced workers a living wage.
Kalina Tsang, Head of Oxfam’s Hong Kong, Macau, Taiwan Programme said: ‘Despite Hong Kong’s growing poor population and the fact that the city’s fiscal reserves have reached a record high, public expenditure has been minimal and lags behind the international level. The findings show that trickledown economics has failed as the poor lack upward social mobility; working hard just doesn’t keep people out of poverty anymore. The government must improve its policies and increase public spending to improve public services that benefit the poorest and society at large.’
‘People across the globe are angry and frustrated. Governments must now deliver real change by ensuring corporations and wealthy individuals pay their fair share of tax and investing this money in free healthcare and education that meets the needs of everyone – including women and girls whose needs are so often overlooked. Governments can build a brighter future for everyone – not just a privileged few,’ added Byanyima.
Oxfam’s calculations are based on the most up to date, comprehensive data sources available. Figures on the share of wealth owned by the poorest half of humanity come from Credit Suisse Wealth Databook and relate to the period June 2017 - June 2018. Figures on the very richest in society are based on more detailed data from the Annual Forbes ‘Billionaires List’ and relates to the period March 2017 - March 2018.
Affordable and quality healthcare is a basic right.
Chhatiya, who lives with her family in an urban slum in Patna, India, struggled to get decent healthcare when she was pregnant. The ill-equipped primary health care centre left her with no choice but to go to a private clinic for everything from an ultrasound to neonatal care when her son was born and required medical attention. Without affordable healthcare, Chhatiya and her husband were forced into debt because of the medical fees.
Chhatiya, however, is not alone – 60 million Indians are pushed into poverty because of healthcare costs every year: almost two people every second. The truth is there are quite a few quality hospitals in India that draw medical tourists in from neighbouring countries. Ironically though, the infant mortality rate in India’s poorest state is even higher than that in sub-Saharan Africa. This is the result of the Indian government’s lack of spending in public health and the over-privatisation of medical services.
Despite having one of the lowest infant mortality rates, Hong Kong still has an underfunded public healthcare system, meaning people often have to live with their medical conditions for longer than they should. Currently, the average waiting time for new patients who need to see a specialist is 78 weeks (i.e. a year and a half). When a disease comes knocking on your door though, it won’t wait till your next doctor’s appointment. With overcrowded hospital wards, understaffed hospitals and long queues for public health services, the crux of the problem is clearly systemic and lies in the lack of funding.
Quality healthcare should not be a luxury. That’s why aside from putting pressure on governments worldwide, Oxfam is also calling on the Hong Kong government to fulfil its responsibilities, promote progressive and long-term poverty alleviation policies, and increase its recurrent expenditure on public services by HK$36.7 billion a year.