Countries should consider raising taxes on the rich to reduce the growing inequality between the haves and have nots in OECD countries,the Paris-based organisation said on Monday. In a study of long-term trends in income inequality,the Organisation for Economic Cooperation Development said the earnings gap between the rich and poor had reached its highest level in 30 years. The gulf between rich and poor has widened even in countries usually considered highly egalitarian such as Germany,Denmark and Sweden,the OECD said. Inequality was the highest in Mexico and Chile. The wealthys share of the income pie rose across the OECD in the three decades from 1980 to 2010,although much more so in the US,followed by Australia,Canada,Britain and Ireland. In the case of the US,the OECD found that the earnings of the top 1 per cent richest people had more than doubled from 8 per cent of the total in 1979 to 17 per cent in 2007. Meanwhile,the lowest earners share fell from 7 per cent to 5 per cent. The think tank said that India is one country that has experienced significant increase inequality over time,where the ratio between the top and the bottom deciles of the wage distribution has doubled since the early 1990s. The main driver has been an increase in wage inequality between regular wage earners i.e. contractual employees hired over a period of time, it said. However,OECD noted that inequality in the casual wage sector workers employed on a day-to-day basis has remained more stable. Without a comprehensive strategy for inclusive growth,inequality will likely continue to rise OECD secretary general Angel Gurria said in a statement. There is nothing inevitable about high and growing inequalities,Gurria said. With public finances under strain in most of the developed countries belonging to the OECD,the organisation saw limited scope for more spending on government transfers to the poor. Since the share of income going to top earners had risen over the last decades,the OECD said governments should look into making them bear a bigger tax burden. While higher marginal tax rates might be a option,the OECD also said that other measures such as improving tax compliance and scrapping tax breaks might more effective.
