At the start of Davos, Oxfam calls for taxing food companies to reduce inequality

Food companies making big profits as inflation has soared should face unexpected taxes to reduce global inequality, anti-poverty group Oxfam said Monday as the World Economic Forum’s annual meeting begins.

That’s one idea raised in a report by Oxfam International, which has spent a decade trying to highlight inequality at the conclave of political and business elites in the Swiss ski resort of Davos.

The report, which aims to provoke discussion at panels with business and government leaders this week, said the world has been hit by simultaneous crises including climate change, the rising cost of living, Russia’s War in Ukraine and the Covid-19 pandemicbut the world’s richest have gotten richer and corporate profits are skyrocketing.

According to Oxfam, the 1% of the world’s super-rich have accumulated almost twice as much wealth in the past two years as the remaining 99% combined. At least 1.7 billion workers now live in countries where inflation is outpacing wage growth, even as billionaires’ wealth grows by $2.7 billion a day.

Tax the rich

To combat these problems, Oxfam called for higher taxes on the wealthy through a combination of measures including one-off “solidarity” taxes and raising minimum rates for the wealthiest. The group found that billionaire Tesla CEO Elon Musk’s true tax rate from 2014 to 2018 was just over 3%.

A “true tax rate” is defined by ProPublica as the amount of tax paid annually by the wealthiest Americans compared to the estimated growth in their wealth over the same period. For example, Amazon CEO Jeff Bezos paid $1.4 billion in federal taxes on $6.5 billion he reported in revenue between 2006 and 2018, while his wealth increased by $127 billion over the same period rise. According to ProPublica’s calculation, this corresponds to an actual tax rate of 1.1%.

“A tax of up to 5% on the world’s multimillionaires and billionaires could bring in $1.7 trillion a year,” Oxfam said. “Enough to lift 2 billion people out of poverty.”

Some governments have opted to tax windfall profits from fossil fuel companies as Russia’s war in Ukraine last year sent oil and natural gas prices soaring and squeezed household finances around the world.

Oxfam wants the idea to go further and include big food corporations to narrow the growing gap between rich and poor.

“The number of billionaires is growing, they are getting richer, and even very large food and energy companies are making inflated profits,” says Gabriela Bucher, CEO of Oxfam International.

“What we’re asking for is unexpected taxes, not just for energy companies but also for food companies, to end this crisis profiteering,” Bucher told The Associated Press.

Oligopolies dominate food and energy

Oxfam said wealthy companies are using the war as an excuse to pass on even bigger price increases. Food and energy are among sectors dominated by a small number of players with 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 for both energy companies and large food retailers, including supermarket and hypermarket chains. It came into force at the beginning of January and is valid for the whole of 2023.

The 33% tax is levied on profits that are at least 20% above the average for the previous four years. Proceeds go to welfare programs and help small grocery retailers.

Oxfam said its analysis of 95 companies that made excess or windfall profits found 84% of those profits were paid to shareholders, while higher prices were passed on to consumers.