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What is windfall tax? Oxfam says tax of $490bn on Covid profits could ease food crisis

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Data showed that food, fossil fuel, and pharmaceutical companies made massive profits during the coronavirus (COVID-19) pandemic. Now, Oxfam’s global head suggests that, in the aftermath, such companies be required to pay windfall taxes on their excess income. Windfall tax is imposed on an unforeseen or unexpectedly large profit, particularly one that is deemed excessive or obtained unfairly.

According to the report, a 90% windfall tax on excess profits globally would generate approximately $490 billion. The funds raised could be used to alleviate the global food crisis, which is reaching “catastrophic proportions” for hundreds of millions of people.

As quoted by the UK-based media outlet, Gabriela Bucher, who is the executive director of Oxfam International, said: “The food crisis we’re facing is extremely serious, and probably unprecedented.”

“There’s insufficient funding to address the immediate life-saving that is required, but also for the long term, addressing the root causes. If we don’t act fast, it will continue and reach really catastrophic levels,” she added.

Bucher went on to say that the windfall tax could be used to help the poor in developed countries deal with the cost of living crisis. It has the potential to contribute to addressing the extremely concerning issue of hunger in the developing world.

“We know that large corporations are making very significant profits, and have been making them throughout the pandemic,” she said, citing fossil fuels, food, and pharmaceuticals as examples.

“We calculated how much excess profit there was during the pandemic, and taxing excess profits as a windfall tax would generate resources for both the most affected populations in the richer countries, and to be able to fulfill commitments in terms of aid and responding to the world’s worst suffering,” she added.

Bucher also mentioned that such a move would address long-term food security concerns. She argued that it is critical to save lives now while also strengthening the systems that will allow “populations to be resilient.”

The war in Ukraine is to blame for the global food crisis. A major aid organization’s head has warned that it will kill millions by making the poorest people more vulnerable to infectious diseases. The food crisis has the potential to precipitate the world’s next health disaster.

A Russian naval blockade of Ukraine’s Black Sea ports has halted grain shipments from the world’s fourth-largest wheat and corn exporter, raising the prospect of food shortages and hunger in low-income countries.

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