In what amounts to rare praise for Argentina’s politics and economic policies, global anti-poverty charity Oxfam hailed the Alberto Fernández administration’s one-off capital levy on wealthy citizens this week, calling on other nations to follow suit.
In reaction to the pandemic, countries should raise wealth taxes like Argentina, Oxfam told the Davos Economic Forum (held virtually rather than at the Swiss Alpine resort this year), citing last month’s law aimed at raising three billion pesos to alleviate the impact of the pandemic.
Oxfam said “progressive taxation” of the rich is key to any equitable recovery from the crisis, and said Argentina had “showed the way” with its one-off capital levy, which came into effect on Friday.
“A tax on the excess profits earned by corporations during the coronavirus pandemic could generate US$ 104 billion – enough to provide unemployment protection for all workers, and financial support for all children and elderly people in the poorest countries,” it added.
The charity warned that the Covid-19 crisis had deepened inequality practically worldwide in the last year in a report titled The Virus of Inequality, thus necessitating higher wealth taxation.
The report maintained that it would take the 1,000 richest people in the world (mostly white males, the charity added) “only nine months to recover their pre-pandemic levels of wealth while the poorest could need over a decade to recover from the economic impact.”
Oxfam considered the Covid-19 crisis a unique opportunity to finally establish fiscal justice, also proposing taxes on financial transactions and measures to eradicate tax evasion.
Their global study interviewed 295 economists from 79 countries, of whom the best-known was Jeffrey Sachs, who shared their vision of growing inequality as a consequence of the pandemic.
The latest Oxfam report warns that “a super-rich elite continue to accumulate wealth in the midst of the biggest economic crisis since the Great Depression while billions of people face great difficulties in just keeping going.”
The 10 biggest fortunes in the world have increased by half a trillion dollars since the pandemic started, the report said, a figure more than enough to finance a universal vaccine against Covid-19 while guaranteeing against anybody falling into poverty as a result.
The report also reveals that the pandemic is “deepening historic economic, racial and gender inequalities” while leaving hundreds of millions of people underemployed or jobless with women bearing the brunt of these losses while also comprising approximately 70 percent of the often underpaid health and social workers fighting the pandemic at great risk.
Gabriela Bucher, executive director of Oxfam International, concluded: “The world has witnessed the biggest increase in inequality ever registered. The profound gap between rich and poor has proved as lethal as the virus itself. This inequality is not inevitable but a political choice. Governments worldwide should take advantage of this opportunity to build more inclusive economies to protect the planet and end poverty.”
LEVY KICKS IN
Argentina’s so-called ‘wealth tax’ – which will be used to help pay for medical supplies and relief for small businesses battered by the coronavirus pandemic, according to the government – entered into force on Friday.
The levy will apply to individuals whose assets exceed 200 million pesos (about US$ 2.3 million). The government hopes to raise about US$ 3 billion from taxing the richest 12,000 citizens.
More than 40 percent of the country’s population lives under the poverty line.
Starting Friday, the AFIP national tax bureau is authorised to start calculating and claiming the amounts due. Under the law, those who are taxable will pay up to 3.5 percent on assets declared within the country, and up to 5.25 percent on assets held abroad.
The proceeds will be used to buy medical supplies, aid small and medium enterprises, fund social aid, and to provide natural gas to people off the energy grid, according to the text of the law.
The measure has been criticised by members of the Juntos por el Cambio opposition coalition, which has described it as “confiscatory.”
And the Argentine Rural Society, which represents the interests of large farmers in a country whose income depends heavily on grain and cattle production, has expressed fear the measure would become permanent.