The world’s 20 largest economies agreed to work together to ensure effective taxation of the super-rich in a declaration, according to Euractiv.
The declaration, which would be published on Friday, 26 July, was a priority for Brazil chairing this year’s G20 negotiations. Its leader Luiz Inácio Lula, a former factory worker, pushed for the inclusion of a “billionaire tax” on the G20 agenda.
“With full respect to tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed. Co-operation could involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices.”
Brazil launched discussions on a proposal to levy a 2% wealth tax on fortunes over $1bn. The move would raise up to $250bn a year from 3,000 people, Finance Minister Fernando Haddad reported.
What started today is a broader process that will require the participation of academia, scholars, and international organisations with experience and time, such as the OECD and the UN.
Although others in the G20 supported the agreement, they noted how difficult it would be to implement. European Economic Commissioner Paolo Gentiloni stated on the sidelines of the G20 meeting:
“We all know that we are starting a process which is very, very challenging. The first step will be to work on exchange of information among different countries. It will be something to discuss in the coming months and years.”
US Treasury Secretary Janet Yellen, however, expressed cautiousness about the new global tax policy, noting that US President Joe Biden had proposed several policies to that end, including a “billionaire tax.”
We think … it makes sense for most countries to take this approach of progressive taxation. And we are happy to work with Brazil on that and propagate these ideas in the G20. But tax policy is very difficult to coordinate globally and we don’t see a need or really think it is desirable to try to negotiate a global agreement on that. We think that all countries should make sure that their taxation systems are fair and progressive.
The “billionaire tax” will target the world’s richest people, such as Tesla and Space X owner Elon Musk, whose fortune Forbes estimates at around $235 billion, Amazon owner Jeff Bezos with a fortune of around $200 billion, or French luxury goods tycoon Bernard Arnault with a fortune of around $180 billion.
Over the past decade, the richest 1% accumulated $42 trillion in new wealth, almost 34 times more than the entire 50% of the world’s poorest people, according to Oxfam. That has only exacerbated wealth inequality.
