The World Bank predicts that ending extreme poverty by 2030 and that ‘global progress in reducing extreme poverty have ground to a halt.
Extreme poverty according to the World Bank increased in 2020 for the first time in 25 years. Coincidentally, extreme wealth has risen dramatically since the pandemic. In Uganda, many Ugandans still live below the national poverty line. The total number of people living in poverty rose to 8.3 million in 2019/20 from 8 million recorded in 2016/17.
Solomon Rukundo, a tax expert at Grant Thornton, says this could be attributed to the regressive tax regime where 68 percent of the country’s taxes are got from indirect taxes.
“Indirect taxes on goods and services account for about 68 percent of the revenues while personal income tax (PIT) accounts for just a quarter of the revenues. Even the little PIT is mostly collected from employees that contribute about 68 percent of the PIT,” he says.
Poverty and Shared Prosperity report of World Bank in 2022, showed that the poorest 40 percent of people saw average income losses of 4 percent during the pandemic, twice the losses experienced by the wealthiest 20 percent. It added that given current trends, 574 million people – nearly 7 percent of the world’s population – will still be living on less than $2.15 a day in 2030, with most in Africa.
But to end poverty, the income inequality gap must be bridged. During the National Tax Symposium held on January 24, economists noted that there is need to increase tax on the world’s super rich to bridge the inequality gap.
This stems from an OXFAM report titled: Survival of the Richest, which says the richest 1 percent grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020; almost twice as much money as the bottom 99 percent of the world’s population.
In October last year, World Bank President David Malpass called for major policy changes to boost growth and jumpstart efforts to eradicate poverty.
“Progress in reducing extreme poverty has essentially halted in tandem with subdued global economic growth,” he said, blaming inflation, for the rise in extreme poverty.
Taxing the rich benefits the most vulnerable twice; from reduced pressure from the regressive taxation, which hits them hardest, and also from improved public spending.
An Oxfam report titled: Survival of the Richest, which says the richest 1 percent grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020, almost twice as much money as the bottom 99 percent of the world’s population.
