An "economic rescue plan for all" can be financed by adopting emergency solidarity taxes on wealthy individuals, speculative financial transactions, economic activity that is damaging to the environment and extraordinary profits, the world organization said in its report.
"New analysis shows the economic crisis caused by coronavirus could push over half a billion people into poverty unless urgent and dramatic action is taken," the report said. "We can only beat this virus through coming together as one. Developing countries must act to protect their people and demand action from rich nations to support them."
The paper proposes a $2.5 trillion aid package to poor countries in a multiprong response to the pandemic. The funds would cover $1 trillion in debt relief, $1 trillion in cash liquidity and $500 billion to expand health care systems, it said. To fund the program, developed nations should raise taxes on prosperous individuals and companies that are able to shoulder the burden, Oxfam said.
"Wherever the money is most concentrated, and extraordinary profits generated, the money must be taxed," it said. "We are dealing with exceptional circumstances that require exceptional measures."
Oxfam asked wealthy nations to impose a temporary tax on businesses with "excess profits" similar to taxes by Britain and the U.S. during World War I, when the countries levied an 80% tax on profits above an 8% rate of return. The report also proposes taxing luxury and carbon-intensive goods, such as sport-utility vehicles.
A financial transaction tax on every transaction would raise tens of billions of dollars, according to the paper. It also advocates a global tax on corporations based on their profits per country and imposing a digital sales tax on companies that derive a large portion of their sales online.
The paper calls for more coordination between countries to crack down on tax evasion. Large corporations should be required to issue public financial reports on their operations in each country, it said. Developing nations should also increase information sharing on tax avoidance, it suggested.
After the pandemic ends, wealthy nations will seek to recover the tax revenue lost as a result of the stimulus package they are funding for poor countries and from the pandemic's effect on their economies, the paper said. They should rewrite their tax systems to promote a more equitable, sustainable economy, Oxfam said.
Countries can accomplish this by shifting taxes from capital to labor. Tax systems should also shift the burden of taxes from the less wealthy to the rich and should raise taxes on polluting industries to promote green economies, Oxfam said.
Oxfam senior policy adviser Didier Jacobs told Law360 on Friday that the group hoped the topic of helping developing nations respond to the COVID-19 pandemic would be discussed at G-20 and World Bank meetings later this month.
"There must be an increase in international aid, whatever the magnitude," Jacobs said. "The U.S. just spent $2 trillion to rescue the U.S. economy. It would be very shortsighted not to do anything for the world because at the end of the day, it is a global problem and requires a global solution."
--Editing by Joyce Laskowski.
Update: This article has been updated to include comment from Oxfam.
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