The richest one per cent in India now own more than 40 per cent of the country’s total wealth, while the bottom half of the population together share just 3 per cent of wealth, a new study showed on January 16.
Releasing the India supplement of its annual inequality report on the first day of the World Economic Forum Annual Meeting at Davos, rights group Oxfam International said that taxing India’s ten-richest at 5 per cent can fetch entire money to bring children back to school.
“A one-off tax on unrealized gains from 2017–2021 on just one billionaire, Gautam Adani, could have raised Rs 1.79 lakh crore, enough to employ more than five million Indian primary school teachers for a year,” it added.
‘Survival of the richest’
The report titled “Survival of the Richest” further said that if India’s billionaires are taxed once at 2 per cent on their entire wealth, it would support the requirement of Rs.40,423 crore for the nutrition of malnourished in the country for the next three years.
“A one-time tax of 5 per cent on the 10 richest billionaires in the country (Rs.1.37 lakh crore) is more than 1.5 times the funds estimated by the Health and Family Welfare Ministry (Rs.86,200 crore) and the Ministry of Ayush (Rs.3,050 crore) for the year 2022-23,” it added.
On gender inequality, the report said that female workers earned only 63 paise for every 1 rupee a male worker earned. For Scheduled Castes and rural workers, the difference is even starker—the former earned 55 per cent of what the advantaged social groups earned, and the latter earned only half of the urban earnings between 2018 and 2019.
“Taxing the top 100 Indian billionaires at 2.5 per cent, or taxing the top 10 Indian billionaires at 5 per cent would nearly cover the entire amount required to bring the children back into school,” it added.
Oxfam said the report is a mix of qualitative and quantitative information to explore the impact of inequality in India. Secondary sources like Forbes and Credit Suisse have been used to look at the wealth inequality and billionaire wealth in the country, while government sources like NSS, Union budget documents, parliamentary questions, etc have been used to corroborate arguments made through out the report.
Surge in wealth of billionaires
Since the pandemic began to November 2022, billionaires in India have seen their wealth surge by 121 per cent, or Rs 3,608 crore, per day in real terms, Oxfam said. On the other hand, approximately 64 per cent of the total Rs 14.83 lakh crore in Goods and Services Tax (GST) came from bottom 50 per cent of the population in 2021-22, with only 3 per cent of GST coming from the top 10 per cent.
Oxfam said the total number of billionaires in India increased from 102 in 2020 to 166 in 2022. The combined wealth of India’s 100 richest has touched USD 660 billion (Rs 54.12 lakh crore)—an amount that could fund the entire Union Budget for more than 18 months, it added.
Oxfam India CEO Amitabh Behar said, “The country’s marginalised—Dalits, Adivasis, Muslims, Women, and informal sector workers are continuing to suffer in a system which ensures the survival of the richest.
“The poor are paying disproportionately higher taxes, spending more on essential items and services when compared to the rich. The time has come to tax the rich and ensure they pay their fair share.” Behar urged the Union finance minister to implement progressive tax measures such as wealth tax and inheritance tax, which he said have been historically proven to be effective in tackling inequality.
Citing a nationwide survey by Fight Inequality Alliance India (FIA India) in 2021, Oxfam said it found that more than 80 per cent of people in India support tax on the rich and corporations who earned record profits during the Covid-19 pandemic. “More than 90 per cent participants demanded budget measures to combat inequality such as universal social security, right to health and expansion of budget to prevent gender-based violence,” it added.
“It’s time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else. Taxing the super-rich is the strategic precondition to reducing inequality and resuscitating democracy. We need to do this for innovation. For stronger public services and for happier and healthier societies,” said Gabriela Bucher, Executive Director of Oxfam International.
One-off solidarity wealth tax
Oxfam India urged the Union Finance Minister to introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering. It also demanded a permanent increase in taxes on the richest 1 per cent and especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income.
Oxfam also called for inheritance, property, and land taxes, as well as net wealth taxes, while enhancing the budgetary allocation of the health sector to 2.5 per cent of GDP by 2025, as envisaged in the National Health Policy. Oxfam said it also wants public health systems to be strengthened and budgetary allocation for education to be enhanced to the global benchmark of 6 per cent of GDP.
“Ensure workers in formal and informal sector are paid basic minimum wages. The minimum wages should be at par with living wages which is essential for living a life with dignity,” it added.
Windfall tax on food companies
As the World Economic Forum’s annual meeting gets underway, Oxfam International said food companies making big profits as inflation has surged should face windfall taxes to help cut global inequality.
That’s one of the ideas in its annual report, which has sought for a decade to highlight inequality at the conclave of political and business elites in the Swiss ski resort of Davos.
The report, which aims to provoke discussions on panels featuring corporate and government leaders this week, said the world has been beset with simultaneous crises, including climate change, the surging cost of living, Russia’s war in Ukraine, and the COVID-19 pandemic, yet the world’s richest have gotten richer and corporate profits are surging.
Over the past two years, the world’s super-rich 1 per cent have gained nearly twice as much wealth as the remaining 99 per cent combined, Oxfam said. Meanwhile, at least 1.7 billion workers live in countries where inflation is outpacing their wage growth, even as billionaire fortunes are rising by $2.7 billion a day.
Measures to combat inequality
To combat these problems, Oxfam urged higher taxes on the rich, through a combination of measures including one-time “solidarity” taxes and raising minimum rates for the wealthiest. The group noted that billionaire Tesla CEO Elon Musk’s true tax rate from 2014 to 2018 was just over 3 per cent.
Some 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, squeezing household finances around the world.
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Oxfam wants the idea to go further to include big food corporations, as a way to narrow the widening gap between the rich and poor.
“The number of billionaires is growing, and they’re getting richer, and also very large food and energy companies are making excessive profits,” said Gabriela Bucher, Oxfam International’s executive director. “What we’re calling for is windfall taxes, not only on energy companies but also on food companies to end this crisis profiteering,” Bucher said in an interview.
War as an excuse
Oxfam’s report said 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 said.
At least one country has already acted. Portugal introduced a windfall tax on both energy companies and major food retailers, including supermarket and hypermarket chains. It took effect at the start of January and will be in force for all of 2023. The 33 per cent tax is applied to profits that are at least 20 per cent higher than the average of the previous four years. Revenue raised goes to welfare programs and to help small food retailers.
Oxfam said its analysis of 95 companies that made excess, or windfall profits, found that 84 per cent of those profits were paid to shareholders while higher prices were passed on to consumers.
(with inputs from PTI and AP)