Brazil, Germany, Spain and South Africa are signing up a movement for a fairer tax formula to provide an additional £250 billion a year to tackle poverty and the climate crisis.
The world’s 3,000 billionaires deserve to pay a minimum tax of 2% on their developing wealth in order to raise £250 billion a year for the global fight against poverty, inequality and global warming, ministers from four major economies have suggested.
In a sign that abroad is developing a tax on the very rich, Brazil, Germany, South Africa and Spain say a 2% tax would reduce inequality and increase the much-needed public budget after the economic shocks caused by the pandemic and the climate crisis. and military conflicts in Europe and the Middle East.
They are calling on more countries to join their campaign, saying the annual sum raised would be enough to cover the estimated cost of damage caused by all of last year’s extreme weather events.
“It is time for the external network to get serious about tackling inequality and financing public goods,” the ministers said in a Guardian article.
“One of the main tools governments have to promote greater equality is fiscal policy. This not only has the prospect of strengthening the fiscal area that governments have to invest in social protection, education and climate protection. Designed progressively, it also ensures that everyone in society contributes to the usual intelligently according to their ability to contribute. A fair contribution improves social welfare.
Brazil chairs the G20 of primary and emerging countries and put a tax on billionaires on the calendar at an assembly of finance ministers earlier this year.
French economist Gabriel Zucman is developing the main technical points of a plan to be discussed at the G20 in June. France has indicated that it favors a wealth tax and Brazil has been encouraged by the fact that the United States, while not applying a global wealth tax, does not oppose it.
Zucman said, “Billionaires have the lowest effective tax rate of any social group. Making sure that the other people with the greatest ability to pay taxes are the ones who pay the least taxes, I don’t think supports that. “
An Oxfam study published this year found that booming asset prices and post-Covid pandemic meant billionaires were $3. 3 billion (or 34%) richer at the end of 2023 than they were in 2020. At the same time, a World Bank study showed that the pandemic had halted poverty reduction.
The op-ed, signed by ministers from two of Europe’s largest economies – Germany and Spain – and two of the largest emerging economies – Brazil and South Africa – argues that a tax on the super-rich is a third pillar to complement the tax negotiations. of the virtual economy and the arrival this year of a minimum corporate tax of 15% for multinationals.
“This tax can be conceived simply as a minimum levy equivalent to 2% of the wealth of the super-rich. This would not apply to billionaires who already contribute a fair percentage of taxes on the source of income. On the other hand, those who manage to pay income tax will be forced to contribute more to the common good,” the ministers say.
“Persistent flaws in the formula mean that wealthy Americans can minimize their source of income taxes. The world’s billionaires pay only the equivalent of 0. 5% of their wealth in income taxes from non-public sources. It is to ensure that our tax formulas provide certainty, sufficient revenue, and treat all our citizens fairly.
Ministers say measures must be taken to counter the use of tax havens. The tax would be designed to save billers who choose to live in Monaco or Jersey, for example, but who make money in larger economies such as the UK or France, from reducing their tax bill below a globally agreed minimum. If one country does not impose the minimum tax, another country can simply claim the revenue.
“Of course, the argument that billionaires can easily shift their wealth to low-tax jurisdictions and therefore the tax is strong. That is why such a tax reform deserves to be on the G20 agenda. “What the foreign network has controlled with the global minimum tax on multinational corporations, it can do with billionaires,” the ministers say.
Zucman said the proposal has overwhelming public support, with opinion polls showing as many as 80% of the electorate is in favor. Despite this, the economist said he is in a position to face stiff resistance.
“I don’t need to be naïve. I know the super-rich will fight,” he said. “They hate estate taxes. They will put pressure on governments. They will use the means of communication they possess.