Index: Global inequality rises during pandemic

Half of the poorest countries have cut health budgets despite the coronavirus pandemic and 95% of all countries have frozen or even lowered tax rates on the wealthy and corporations. This has further aggravated economic inequalities around the world. The Netherlands drops to 30th place on the list of 161 countries. This is clear from the new Oxfam’s Commitment to Reducing Inequality Index and Development Finance International. The index will be released ahead of the annual meetings of the World Bank and International Monetary Fund (IMF) this week.

The new Commitment to Reducing Inequality Index 2022 (CRI Index) examines the policies and actions taken by governments in 161 countries in the first two years of the pandemic to tackle economic inequality. The Index is published every 2 years. The new index shows that, despite the pandemic, half of low- and lower-middle-income countries have cut their health budgets. Half of all countries (77) have reduced the share spent on social care, while 70% of countries have cut the budget for education. Despite huge pressures on public finances, 143 of 161 countries have frozen tax rates for their wealthiest citizens. These rates have been reduced in 11 countries.

“The new index shows that most governments cut public services when citizens need them most. At the same time, the wealth of billionaires is exploding and big corporations are making record profits. For billions of people, good access to health care or education was already unavailable. Today, more and more people are facing poverty due to rising energy and food prices,” says Esmé Berkhout, economics expert at Oxfam Novib.

Harmful tax policy in the Netherlands
The Netherlands performs well in areas such as public services, but is even worse than two years ago in the fight against tax evasion, falling to 109th place in this area. In the 2020 index, the Netherlands ranks 93rd for tax policy. As a result, the Netherlands now drop to 30th place overall, far behind the top 10 of countries like Belgium and Germany. In 2020, the Netherlands took 23rd place overall in the CRI index. The harmful tax policy of the Netherlands always has negative consequences for other countries, especially developing countries, because they are deprived of tax revenue.

France fell five places in the index after lowering corporate tax rates and abolishing wealth tax altogether in 2019. In Jordan, healthcare spending fell by a fifth, despite the pandemic. Nigeria has not adjusted its minimum wage since before the pandemic and the United States has not increased the federal minimum wage since 2009.

Several countries have taken steps to reduce inequality:

• Costa Rica raised its top tax rate by 10% and New Zealand by 8%.

• The occupied Palestinian territories have increased their social expenditure from 37 to 47% of the total budget.

• Barbados enacted a comprehensive set of laws to improve women’s rights at work, and the Maldives introduced a national minimum wage for the first time.

Analysis by Oxfam and DFI shows that, based on IMF data, three-quarters of all countries plan to implement new austerity measures over the next five years, for a total of 7 .8 trillion. In 2021, low-income countries spent 27.5% of their budgets on debt repayment – ​​twice the amount they spent on education, four times the amount these countries spent on health care. health and nearly 12 times the amount they spent on social care. . Current economic inequality and poverty in poor countries are exacerbated by pressure from the IMF for new austerity measures to reduce debt and budget deficits. What many low- and middle-income countries need is rapid and comprehensive debt cancellation to give them more means to fight food and fuel crises and thus reduce economic inequalities.

“For every dollar spent on health care, developing countries pay $4 in debt repayments to wealthy creditors. Comprehensive debt relief and higher taxes for the wealthy are essential for them to significantly reduce inequality,” said Matthew Martin, Director of DFI.

Source: Oxfam Novib. Download here the index (PDF)