In the report that Oxfam presented at the global level on January 16 in the context of the World Economic Forum in Davos, Switzerland, these inequalities are illustrated but, on this occasion, with a focus on tax systems. The current fiscal rules allow and encourage few people to amass large amounts of money, while States have increasingly reduced fiscal space to meet their obligations and to reduce inequalities.
According to the report The law of the richest2,655 billionaires—that is, those with fortunes of more than a billion dollars—globally accumulated close to 2.7 billion dollars a day during the pandemic. According to the special report made by Oxfam for Latin America and the Caribbean, the data for the region is equally or more worrying: 30 new billionaires joined the list to reach a select group of 91 people in the region, while 12 million people were added to extreme poverty at the same time.
This excessive concentration of wealth is due to the fact that the tax design of Latin American countries widens inequalities, since it collects less from those who have more: while the collection of taxes on labor and consumption rose by 11%, the collection of corporate income and wealth fell by 5% between 2007 and 2019.
In Mexico, during the pandemic, the fortune of the 15 billionaires increased by 645,000 million pesos —that is, their fortunes grew by a third, while almost 4 million new people now live in poverty, despite the fact that the current federal government has undertaken important policies and actions to combat extreme inequality and increase tax collection. In addition to increases in the minimum wage and the expansion of labor rights for millions of people, audits of large taxpayers carried out between 2020 and 2022 increased collection by 754,000 million pesos.
However, these actions are not enough. We need progressive tax reform that charges more to those who have the most, particularly the super-rich, those 15 people with fortunes greater than a billion dollars.. Mexico continues to occupy the last position among the large economies of Latin America and the Caribbean in terms of wealth tax collection, with an amount that barely reaches the equivalent of 0.34% of GDP, compared to the Latin American average of 2.57%. This is even more important at a time when we are increasingly paying more for debt service and pensions. There is less and less money available for social programs, social infrastructure and investment for the expansion or maintenance of public services.
Taxpayers with income above 500 million pesos per year barely represented 0.03% of the total collection of federal taxesof agreement with the Ministry of Finance. In addition, until 2021 large companies paid effective income tax rates of just between 1 and 8% of their total income, well below the 30% established by law.