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

During the coronavirus (COVID-19) pandemic, data showed that food, fossil fuel and pharmaceutical companies have enjoyed massive profits. Now, the global head of Oxfam suggests that in the aftermath, such companies should be asked to pay windfall taxes on their excess income. Windfall tax is levied on an unforeseen or unexpectedly large profit, especially one regarded to be excessive or unfairly obtained.

The report added that a windfall tax of 90 per cent on the excess profits globally would yield about $490 billion. The collected money could be used to solve the food crisis, which is heading to "catastrophic levels" for hundreds of millions of people across the world.

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 further mentioned that the windfall tax could be used to alleviate the cost of living crisis for the poor in developed countries. It can help address 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 during the pandemic," she said, singling out fossil fuels, food and pharmaceuticals.

"We've calculated how much excess profit there has been during the pandemic and taxing excess profits as a windfall tax would generate resources both for the most affected populations in the richer countries, and to be able to fulfil commitments in terms of aid, and responding to the worst suffering in the world," she added.

Bucher also added that such a move would also address longer-term food security issues. She argued that it is important to save lives now but also really strengthen the systems that will enable "populations to be resilient".

The global food crisis is sparked by the war in Ukraine. The head of a major aid organisation has warned that it will kill millions by leaving the hungriest more vulnerable to infectious diseases. The food crisis has the potential to trigger the world's next health catastrophe.

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

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