One-off tax on Covid profits could ease catastrophic food crisis

Cover the climate nowThis story is part of Covering Climate Now, an international journalism collaboration co-founded by Columbia Journalism Review and The nation strengthen coverage of climate history.

FFood, fossil fuel and pharmaceutical companies that have made windfall profits during the Covid-19 pandemic and its aftermath should be hit with a windfall tax on their excess income, the global head of Oxfam has said. .

A one-off 90% excess profits tax globally would raise an estimated $490 billion that could be used to address the food crisis, which is heading to “catastrophic levels” for hundreds of millions of people, and put the world on the path to a sustainable food system,” said Gabriela Bucher, Executive Director of Oxfam International.

“The food crisis we are facing is extremely serious, and probably unprecedented. There is not enough funding to address the immediate life-saving needs, but also in the long term, to address the root causes,” she said. “If we don’t act quickly, this will continue and reach truly catastrophic levels.”

A windfall tax could be used to alleviate the cost of living crisis for the poor in developed countries and growing hunger in the developing world, Bucher argued.

“We know that big companies are making very big profits and have made them during the pandemic,” she said, singling out fossil fuels, food and pharmaceuticals. “We calculated how much excess profit there has been during the pandemic and taxing excess profit as a windfall tax would generate resources both for the most affected populations in the wealthiest countries, and to be able to meet the commitments in terms of aid, and respond to the worst suffering in the world.

Such a tax would also generate funds to strengthen the food system against future crises. “[It would] also address longer-term food security issues, because it’s important to save lives now, but also to really strengthen the systems that will allow people to be resilient,” she said.

Windfall taxes have been claimed or implemented in several major economies, including the UK. Rishi Sunak, the Chancellor of the Exchequer, recently imposed a tax on oil and gas companies, but with loopholes that allow them to receive tax breaks instead if they invest their profits in increased production.

According to Oxfam, nearly 200 million people face severe hunger or even starvation, with the Horn of Africa, Afghanistan and Yemen particularly affected. Extreme weather caused by the climate crisis, including a drought worse than any in the past 40 years in the Horn of Africa, has combined with the impacts of the pandemic – during which many countries have depleted their reserves of food – and the rising cost of fossil fuels. fuels and fertilizers. The war in Ukraine, a major producer of grain, cooking oil and fertilizer, made the disaster worse.

“It’s a combination of several crises at the same time, a polycrisis,” Bucher said. “We say it’s a cost of living crisis, that’s what it’s called around the world. But for many people in the poorest countries, it really is a fight for survival.

Bucher also called on the leaders of the G7 countries, meeting this week at Elmau Castle in Germany, to suspend debt repayment for the poorest countries for two years. Developing countries face rapidly rising interest charges on their debt, and dozens of people are reportedly at risk of default as they struggle to meet the cost of servicing debt while reviving their economies after the pandemic and facing runaway inflation.

“They spend so much on servicing debt that they have less ability to invest in basic issues such as health or addressing food insecurity issues,” she said.

“Some countries are in real stress with debt, and interest rate changes in the wealthy world have meant debt servicing has become more expensive. So we’re calling on the G7 this week to really consider cancel debt repayments for 2022 and 2023 [which would yield] $43 billion a year for the poorest countries,” she said. “[That] it is money that could be spent now to deal with the starvation conditions that many people are experiencing and be able to invest in the longer term for secure livelihoods.

Bucher said that if the G7 did not act, the consequences for the poor would be “unimaginable”. “What we want to avoid are the catastrophic consequences of hundreds of thousands or millions of deaths. We still have time, but the more time passes, the more inaction there is, the greater the danger.

The rich must also pay more taxes to help the poor, Bucher insisted. The pandemic and food crisis have created at least 62 new billionaires in the food sector alone, according to Oxfam.

There are at least 2,700 billionaires in the world, but wealth taxes only generate about 4% of countries’ total tax revenue, so there should be a lot more scope for taxing wealth, according to Bucher. She pointed out that the richest 1% of the world’s population produce twice as much greenhouse gas emissions as the poorest 50%.

“We don’t think some of the extreme wealth and accumulation is sustainable and consistent with a sustainable planet,” she said. “In 2022, having a food crisis of the level we are experiencing is not morally acceptable, and we all need to take responsibility and act.”

She said the problem lay in resource allocation and consumption. “We cannot live in a world where people are starving. There are enough resources. There is enough food. We have to be really connected and understand that my actions in one part of the world have impacts in the other part of the world. The climate crisis is where this is most clearly evident.

Bucher was talking to The GuardianLondon offices to the Covering Climate Now coalition, including The Guardian is a member.

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