The pandemic, inequality and taxation – the real reset needed

Wednesday, 15 April, 2020

As you are working extremely hard to keep Europe’s public services going with many of you even being infected or losing co-workers, comrades or family members, this crisis underlines that we have no use for the wealthy. They are not turning up to help out in elder care homes or filling shelves in supermarkets. They are more likely to be hiding their billions in tax havens to avoid paying the tax that is urgently needed to fund the recovery and our public services. It is not the wealthy that pump money into the economy to save jobs, prevent bankruptcies or restart the economy. Our governments are doing this and even the European Commission is contributing a little, but more about that later.

Many are saying that this crisis can lead to a reset. With COVID-19, we understand, maybe in a more direct way than with climate change, how we are tied together on our planet. Public money, if used properly, can assist in addressing global warming and put our economies on a more sustainable course. It can further be a moment to address that other global crisis – of vast inequalities. A solution to that crisis will almost certainly assist in achieving the Paris Climate goals, deliver on poverty reduction and strengthen our public institutions to ensure the human rights to health, water and education for all.

According to the development campaign charity Oxfam in 2019 the world’s billionaires, only 2,153 people, had more wealth than 4.6 billion people. Its report, Time to Care, published in January this year exposes just how out of control our economic system is, highlighting the low incomes of millions of care-givers, including those in the informal economy and who look after family members. And it is they, mostly women, who now run risks for themselves and their families by being on the frontline in hospitals, elderly and residential homes, and in delivering home care. The real reset is to wrestle our societies out of the claws of the predators.

And tax will be part of the answer. Oxfam’s proposal is very modest, suggesting that the richest one percent pay just 0.5 percent extra tax on their wealth over the next 10 years. This would equal the investment needed to create 117 million jobs in sectors such as elderly and childcare, education and health. In the past, others have proposed a global tax of about 1% on all wealth. If realized our world would have been a very different place and would have coped better with this pandemic. The wealthy have resisted. Now such modest proposals are not enough. Substantial national, European and global wealth taxes should be on the agenda.   Our world does not need billionaires. It does need a lot more equality.

This is not going to be a walk in the park. The recent discussions in the Eurogroup give a glimpse of the entrenched resistance to modest proposals to get us all moving forward. The governments of Austria, Germany, the Netherlands and others do not want Eurobonds. Such bonds would have been one way of assisting countries like Italy and Spain tackle their public debt. However, such bonds don’t guarantee against draconian austerity being imposed on workers and people in 2-3 years’ time.

And while every little helps, the small amount of money the Commission makes available to guarantee loans and credits, is not likely to add up to the recovery plans needed. And these come with strings attached. The money for real recovery plans in the Eurozone, EU and beyond will require central banks putting money in the coffers of government. It means making the European Central Bank the real central bank for the Eurozone so that it can do the same.

For EPSU these recovery plans will have to be focused on realizing the Green and Social Deal, addressing inequalities, making our social protection systems robust, strengthening our public services to deliver for all in society and improving information and consultation rights and collective bargaining. These rights are even more important now that discussions have started in several countries on “exit” strategies from the lockdown. If employers do not have a health and safety preparedness plan approved by the unions, can workers be confident it is safe to return to work? We want to see governments and the European Commission include this in their exit plans. This can be done. This must be done.