By Hereward Holland
NAIROBI (Reuters) – Tax systems that put a high burden on the poor mean public services are underfunded, stretching the gap between rich and poor and fuelling global public anger, Winnie Byanyima, executive director of Oxfam International, said on Monday.
The Nairobi-headquarted charity said in a report that a new billionaire was created every two days last year, just as the poorest half of the world’s population saw their wealth decline by 11 percent.
The report, released on Monday as political and business leaders gather for the annual World Economic Forum in Davos, Switzerland, said governments are increasingly underfunding public services and failing to clamp down on tax dodging.
“Poor people suffer twice from being deprived of basic services and also paying a higher burden of taxation,” Byanyima said in an interview.
Billionaire fortunes increased by 12 percent last year, or $2.5 billion a day, while the 3.8 billion poorest people saw their wealth drop $500 million every day, Byanyima added.
The charity said tax rates for the rich and corporations had been cut in recent decades. And when governments fail to tax the wealthy, they pass the tax burden on to poor people through consumer levies like value added tax, Byanyima said.
“An indirect tax like that, that taxes salt, sugar or soap, the basics that people need … then poor people pay relatively more out of their income than rich people,” she said.
(Reporting by Hereward Holland; Editing by Omar Mohammed and David Holmes)