Taxes on ordinary Swedes raise 28 times more revenue than taxes on wealth

Taxes on consumption and workers' wages account for almost €8 out of every €10 in EU governments' coffers. Tax rates for the richest Europeans and the largest companies have fallen in recent decades, while taxes on consumption and labor have increased. Oxfam wants to see a more progressive tax system, where those with the most contribute more to the common good. Over 300,000 Europeans have so far signed a call for the EU to tax the richest.

Taxes on consumption and on labor, which make up a larger proportion of the wallet of Swedish wage earners, provide 28 times more tax revenue than taxes on wealth paid mainly by the very richest, according to a new analysis by Oxfam. This compares with Spain, for example, where taxes on wage earners account for about 9 times more tax revenue than taxes on wealth. In France, it is about 8 times more for wage earners.

"Sweden is one of the most unequal countries in the EU and one of the OECD countries where economic inequality has increased the most in recent decades. The five richest Swedes own more than five million Swedes combined. We want to see a green wealth tax for the very richest, and that the money is used to fight inequality and finance the green transition."

Rosaline Marbinah, Policy Director Oxfam Sweden

A large share of people's wages goes to income and consumption taxes. Although wealthy individuals also pay taxes on their labor income and consumption, they contribute a smaller share of their total income due to other sources of income, such as wealth. In turn, the lowest earners generally spend the largest share of their disposable income on the consumption of essential goods and services, such as food.

Across the EU, income and consumption taxes account for 13 times more tax revenue than taxes on wealth. In 2022, income and consumption taxes such as VAT accounted for almost 8 out of every 10 euros of total tax revenue in EU countries, while taxes on wealth contributed less than 60 cents for every 10 euros collected.

In 2022, the richest 1% had a quarter of the net wealth in the EU. The ultra-rich - the top 0.001%, corresponding to about 3 650 individuals - saw their wealth increase by 237%, including inflation, between 1995 and 2021. Yet their wealth contributes far less to government coffers than taxes on wages or consumption.

"We are constantly told that there is not enough money to improve the lives of ordinary people or fight the climate crisis. But the facts tell a different story. The ultra-rich accumulate more than they can spend while avoiding taxes; and the rest of us bear most of the tax burden while trying to make ends meet. A European wealth tax is not only urgent, it is fair."

Rosaline Marbinah, Policy Director Oxfam Sweden

Oxfam's analysis also shows that in recent decades, taxes for wealthy individuals and companies have decreased in EU countries, while tax rates on income and consumption have increased.

"In the EU, as in Sweden, the tax system exacerbates the gap between rich and poor. The government's announcement of tax cuts on income will mainly benefit high-income earners. Wage earners have a greater need for welfare than the rich, and shared social services continue to be eroded. If the government wants to pursue policies that actually create equality, taxes for the richest in Sweden need to be increased through, among other things, wealth tax, inheritance tax and a more progressive and higher marginal tax."

Rosaline Marbinah, Policy Director Oxfam Sweden

Based onon Oxfam's report "Inequality Inc." Oxfam estimates that:

A progressive wealth tax on EU multimillionaires and billionaires of up to 5% could generate €286.5 billion each year (€785 million per day or €32.7 million per hour). This could finance more than three times the EU's seven-year aid budget (€78.6 billion).

Oxfam, together with politicians, economists like Thomas Piketty and multi-millionaires like Marlene Engelhorn, is supporting a European Citizens' Initiative for a European Wealth Tax. The European Citizens' Initiative allows EU citizens to call on the European Commission to propose new legislative initiatives and measures if 1 million signatures are reached. The deadline for collecting signatures is October 9, 2024. Over 300,000 people have signed up until September 5.

Last July, G20 finance ministers agreed to work together to tax the ultra-rich. Several organizations handed over petitions with over 1.5 million signatures from people all over the world calling on policymakers to tax the ultra-rich.