As Davos opens, Oxfam pushes for windfall taxes on food companies

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LONDON — Food companies making big profits as inflation has soared should face unexpected taxes to reduce global inequality, anti-poverty group Oxfam said on Monday as the World Economic Forum’s annual meeting begins.

That’s one idea raised in a report by Oxfam International, which has spent a decade trying to highlight inequality at the conclave of political and business elites in the Swiss ski resort of Davos.

The report, which aims to provoke discussions at panels with business and government leaders this week, said the world has already been hit by simultaneous crises, including climate change, the rising cost of living, Russia’s war in Ukraine and the COVID-19 -Pandemic The world’s richest have gotten richer and corporate profits are skyrocketing.

In the past two years, the 1% of the world’s super-rich have accumulated almost twice as much wealth as the remaining 99% combined, Oxfam said. At least 1.7 billion workers now live in countries where inflation is outpacing wage growth, even as billionaires’ wealth grows by $2.7 billion a day.

To combat these problems, Oxfam called for higher taxes on the wealthy through a combination of measures including one-off “solidarity” taxes and raising minimum rates for the wealthiest. The group found that billionaire Tesla CEO Elon Musk’s true tax rate from 2014 to 2018 was just over 3%.

Some governments have moved to tax fossil-fuel companies’ windfall profits as Russia’s war in Ukraine last year has pushed up oil and natural gas prices and squeezed household finances around the world.

Oxfam wants the idea to go further and include big food corporations to narrow the growing gap between rich and poor.

“Billionaires are growing and they are getting richer, and even very large food and energy companies are making excessive profits,” said Gabriela Bucher, executive director of Oxfam International.

“What we’re asking for is unexpected taxes, not just for energy companies, but also for food companies, to end this crisis profiteering,” Bucher said in an interview with The Associated Press.

Oxfam’s report says wealthy companies are using the war as an excuse to pass on even bigger price hikes. Food and energy are among sectors dominated by a small number of players with effective oligopolies, and the lack of competition allows them to keep prices high, the group said.

At least one country has already acted. Portugal introduced a windfall tax for both energy companies and large food retailers, including supermarket and hypermarket chains. It came into force at the beginning of January and is valid for the whole of 2023.

The 33% tax is levied on profits that are at least 20% above the average for the previous four years. Proceeds go to welfare programs and help small grocery retailers.

Oxfam said its analysis of 95 companies that made excess or fluctuating profits found that 84% of those profits were paid to shareholders, while higher prices were passed on to consumers.

AP reporter Barry Hatton from Lisbon, Portugal contributed to this report.

Follow AP’s coverage of the World Economic Forum meeting at https://apnews.com/hub/world-economic-forum