Oxfam International Executive Director Mrs. Winnie Byanyima, who in the past months has been championing a global campaign against economic inequality, has brought the fight back home.
Mrs Byanyima on Wednesday appealed to the Ugandan government to lead fellow governments in the East African region and the continent as whole in bridging the worryingly widening gap between the rich and the poor.
Byanyima and Oxfam believe that this ever growing gap has been exacerbated by rich companies and individuals around the world taking advantage of the old global taxation systems to avoid paying taxes, there by pushing the heaviest tax burden onto the poor small entrepreneurs.
She says this is the major cause of the slow economic growth of most African and other less developed countries around the world.
A report released by Oxfam last week titled “An Economy for the 1%” indicated that a small group of only 62 super rich people today, own more wealth than the 3.5 billion people who make up the poorest half of the world’s population. This figure was last year at 80 and in 2010 at 388.
In a recorded presentation she made at the Uganda Martyrs University (UMU)’s Annual Research Conference on Wednesday, Mrs Byanyima stressed that the inequality challenge is even more vivid in her home country.
“Our own Sudhir Ruparelia’s wealth amounts to $1.1 billion. If he gave away half of his wealth to his fellow citizens over the next 15 years, this would reduce poverty in Uganda by 1%, lifting hundreds of thousands out of poverty,” she said.
“But that’s not the point. Economic inequality will not be solved by the rich giving away their riches. The inequality we have today has to be tackled from the root. We are not envying the rich, but we are growing slower because of such inequality.”
The super rich, she says have rigged the world economies through tax havens and tax breaks which benefit nobody but them.
“Through this, they avoid paying their share of taxes, robbing governments of the vital money that could pay for schools, health care and other essential services.”
In Africa according to the Oxfam ED, almost one third of the financial wealth of rich individuals, which stands at 500billion dollars, is held offshore in tax havens. This costs the continent up to 14 billion dollars per year in lost tax revenue.
She notes, “This money is enough to save the lives of 4 million lives of sick children and employ enough teachers to get every African child to school.”
“We now must rewrite the rules of taxation and end the escape of taxes from our continent. We have to close all the loopholes in our taxation systems.”
Race to the bottom
Winnie Byanyima says many African counties have been shoved onto what she terms as the “race to the bottom” as they compete for foreign investors.
Here, governments strive to make themselves more attractive to investors by offering tax holidays, tax havens and breaks.
African leaders including Yoweri Museveni hold that only through attracting as many foreign investors as possible, will their countries tackle the unemployment challenge and foster faster economic growth through industrialization.
On a number of occasions the Uganda Revenue Authority has complained about the persuasive tax incentives given exclusively to these foreign companies.
“When the rich aren’t paying their taxes, governments tend to resort to setting regressive taxes such as the VAT. Through VAT a market woman who sells tomatoes, pays more tax relative to her income than a millionaire businessman in Kampala,” Byanyima argued.
In her message, Mrs Byanyima appealed to Uganda, to lead the rest of the continent out of this trap.
“Uganda should engage the African Union to set regional standards, so that the continent can be protected from racing to the bottom,” she said.
She also called for government to focus more on investing in areas that directly benefit poor Ugandans, such as agriculture and infrastructure.
But for all this to happen, she says, people must be able to tell their government and get it to do what they want.
“People must be able to hold their government accountable. We must bring the power back to the people,” she said.