The world’s 3,000 billionaires should pay at least 2% tax on their rapidly growing wealth to raise £250 billion a year for the global fight against poverty, inequality and global warming, the finance ministers of four of the world’s leading economies say.
As a sign of growing global support for taxing the richest, Brazil, Germany, South Africa and Spain claim that a 2% tax will reduce inequality, and enrich public finances after economic upheavals caused by the Corona epidemic, the climate crisis and military conflicts in Europe and the Middle East.
They are calling on more countries to join their campaign, saying that the annual amount raised will be enough to cover the estimated cost of damages caused by last year’s extreme weather events.
“This is the time for the international community to get serious about tackling inequality, and fund global public assets,” the initiators of the proposal told the Guardian. “One of the tools available to governments to promote more equality is taxation policy. This has the potential to increase the fiscal space in which governments should invest in social protection, education and climate change. If this is carried out in a progressive way, it will be ensured that everyone in society contributes to the common good in proportion to their ability to pay. A fair contribution increases social welfare”.
Brazil heads the G20 group of developed and developing countries, and its representatives raised the issue of the billionaire tax at a meeting of economy ministers earlier this year.
The French economist Daniel Zukman, is now publishing the technical details of a plan that will be discussed again by the G20 countries in June. France has expressed support for wealth taxation, and Brazil is encouraged by the fact that the US has not expressed support for the tax, but has not opposed it either.
Zukman: “Billionaires have the lowest taxation of any other group in society. I don’t think anyone supports that the people with the highest ability to pay taxes pay the least.”
A study published this year foundbecause after the corona epidemic, and the real estate price increases that came during it and in its wake, the world’s richest became 34% richer at the end of 2023, compared to their wealth in 2020.
The proposal, signed by two of the largest economies in Europe – Germany and Spain – and two of the emerging economies – Brazil and South Africa – considers that the taxation of the richest is a third pillar to complete the negotiations on the taxation of the digital economy and a minimum worldwide taxation of 15% on membership introduced earlier this year.
“The tax can be designed as a minimum tax of 2% of the wealth of the super-rich. It will not apply to billionaires who already contribute their share through income tax. Those who manage to avoid paying income tax will be obliged to contribute more for the common good,” the ministers said. “Consistent loopholes in the system imply that capitalists can minimize the income tax they pay. Billionaires only pay the equivalent of up to 0.5% of their wealth through income tax. It is imperative to ensure that our taxation systems provide certainty, sufficient profits, and treat all citizens fairly.”
The ministers said that measures will be required against tax havens. The taxation will be designed to prevent billionaires who choose to live in Monaco or Jersey for example, but make their fortunes in large economies such as Britain or France, from reducing their taxation below an agreed global minimum. If the state does not impose the minimum tax, another state can demand the tax.
“Of course, the argument that billionaires can transfer their wealth to a jurisdiction where the tax is reduced and therefore avoid taxation is strong. That is why such a tax reform is on the agenda at the G20. International cooperation and global agreements are the key to making such a tax effective. What the international community has been able to do with the tax The minimum global on international companies can be done with billionaires,” the ministers said.
According to Zukman, there is great public support for the proposal, with opinion polls showing support of up to 80% of voters in favor of it. Despite this, the economist said that he expects overwhelming opposition.
“I don’t want to be naive. I know the super rich will fight,” he said. “They have anti wealth taxation. They will lobby the governments. They will use the media they own.”
