Political will to help poor Pinoys needed

For more than five decades now, the World Economic Forum (WEF) has been bringing together leaders from governments, businesses and civil society every year to debate ideas, share best practices and collaborate on solutions to the world’s pressing problems. Cancelled at the height of the pandemic, the meeting resumes this year in Davos, Switzerland from January 16 to 20 on the theme, “Cooperation in a Fragmented World.” About 600 Ceos and more than 50 heads of state, including President Marcos, are expected to attend.

The slowdown in the global economy will be a major theme at Davos. IMF Managing Director Kristalina Georgieva earlier warned that 2023 will be tougher than last year, while 63 percent of the chief economists that WEF surveyed said 2023 will see a global recession.

A new Oxfam International study—“survival of the Richest”—published on the WEF opening day revealed that the world’s richest one percent grabbed nearly two-thirds of all new wealth worth $42 trillion created globally since 2020. This is almost twice as much money as the bottom 99 percent of the world’s population has. The report said that while the world’s elites are gathering at a Swiss ski resort, extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years. (Read, “As the rich meet in Davos, report flags inequality,” in the Businessmirror, January 17, 2023).

In the Philippines, the poor can hardly recover from back-to-back crises as many of them continue to suffer from the effects of the pandemic and skyrocketing prices. “Inequality experienced in the Philippines is starker with the nine richest Filipinos having more wealth than the bottom half (55 million) of the population,” Oxfam Pilipinas Executive Director Erika Geronimo said.

Geronimo cited Forbes’ Billionaires List and official data analyzed by Oxfam. Since 2012, the number of those worth $5 million (P278.24 million) and above has increased by almost half (43.5 percent). “It is quite disheartening to see many are dying due to lack of health care or are experiencing hunger amid high cost of food while the rich increased their wealth during the pandemic,” she said.

Geronimo pointed out that if a wealth tax were imposed on Filipino millionaires, the country could raise $3.8 billion (P208.3 billion) a year. “This amount is enough to increase our health budget by two-fifths.”

“While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams. Just two years in, this decade is shaping up to be the best yet for billionaires—a roaring 2020s boom for the world’s richest,” said Gabriela Bucher, Executive Director of Oxfam International.

According to Oxfam, billionaires have seen extraordinary increases in their wealth. Billionaire wealth surged in 2022 with rapidly rising food and energy profits. The report shows that 95 food and energy corporations have more than doubled their profits in 2022. They made $306 billion in windfall profits, and paid out $257 billion (84 percent) of that to rich shareholders.

Oxfam urged governments to introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering. “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; for happier and healthier societies. And to tackle the climate crisis, by investing in the solutions that counter the insane emissions of the very richest,” said Bucher.

Portugal recently blazed a trail by introducing its own version of windfall tax. With inflation at near three-decade high, Portugal’s parliament approved a 33 percent tax on the windfall profits of energy companies and major food retailers, including supermarket chains. The new tax took effect on January 1, and is applied to profits that are at least 20 percent higher than the average of the previous four years. Taxes raised will go to the government’s welfare programs.

There’s a common observation around the world that food companies passing their costs onto consumers drove price increases. That’s how they generated windfall profits. Something must be done to end all kinds of crisis profiteering.

It would do well for the Philippines to follow Portugal’s example. We should have our own windfall tax. Or, we can follow Oxfam’s advice to tax the super-rich. We can’t wait for the brilliant ideas from the elite gathering of political leaders and business executives in Davos to reach our shores. The government can do a lot of things to help poor Filipinos now, knowing they are so vulnerable to food inflation. But it takes to get these good things done.