According to Oxfam, on current trends the richest 1 per cent of the world’s population will have a greater share of its wealth than the remaining 99 per cent within two years.
The figures were released to coincide with the opening of the annual bunfight for the rich and powerful, otherwise known as the World Economic Forum in Davos, Switzerland. Expect those who attend to pay lip-service to doing something about these uncomfortable issues. Some may actually mean what they say, realising that there are very real dangers in allowing 80 people to hoard more wealth than the 3.5 billion who struggle to get by on a few dollars a day.
At least some progress has been made on one of Oxfam’s key recommendations – the call for a clampdown on tax avoidance by wealthy individuals and corporations. It is getting harder to utilise places such as Switzerland as a tax haven, largely thanks to the efforts of America’s tax authorities. The EU is belatedly looking into deals done by various multinationals with Ireland, the Netherlands and especially Luxembourg. The OECD’s work on corporate tax avoidance has proceeded at a faster rate than many expected. The US has cracked down on the process of inversion (whereby companies do deals purely for the purpose of changing their tax domicile with a view to keeping their cash out of the hands of Uncle Sam). But it’s not enough.
Partly that’s because the various issues are being addressed piece-meal. Partly it’s because of a lack of ambition. We have, for example, barely scratched the surface of the vast amount of inherited wealth, which is rarely subject to tax (inheritance tax is the most avoidable of levies).
The likelihood is that Oxfam will produce the same report this time next year. And the people who attend Davos will promise to talk about it, before they jet off for a chat with their bankers in Zurich to discuss the latest tax shelter their London accountants have created for them.Reuse content