News
G20 finance ministers agree to work towards effective taxing of the super-rich
RIO DE JANEIRO (AP) — Finance ministers from major rich and developing countries agreed Friday to strive to effectively tax the super-rich, a joint ministerial statement said.
“With full respect for tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high net worth individuals are effectively taxed,” the statement said after the two-day meeting in Rio de Janeiro.
Brazil has made a proposal to impose a 2% minimum tax on billionaires a top priority of its G20 presidency ahead of a Nov. 18-19 summit in Rio.
While the final declaration stops short of agreeing on a specific global tax, Brazil’s Finance Minister Fernando Haddad called it a “significant step forward.”
“We were always optimistic about this result, but it really exceeded our initial expectations,” Haddad told reporters.
Brazil’s proposal to tax billionaires has divided G20 nations, with France, Spain and South Africa expressing support, while the US is against.
“Tax policy is very difficult to coordinate globally, and we don’t see the need or really the desire to try to negotiate a global agreement on this,” U.S. Treasury Secretary Janet Yellen told reporters on Thursday.
Governments fear the super-rich will move their money to tax havens if an individual country adopts such a tax, said economist Rogério Studart, a senior researcher at the Brazilian Center for International Relations think tank.
“When action is taken collectively, everyone wins. When there is fragmentation, many lose,” Studart said.
The richest 1% have accumulated $42 trillion in new wealth over the past decade, nearly 36 times more than the poorest 50% of the world’s population, according to an Oxfam analysis released Thursday ahead of a meeting of finance ministers.
Billionaires currently pay the equivalent of 0.3% of their wealth in taxes, according to a report by Gabriel Zucman, commissioned by Brazil. A 2% tax would raise $200 billion to $250 billion a year globally from about 3,000 individuals, money that could fund public services like education and health care, as well as the fight against climate change, the report said.
Zucman, who is the founding director of the Paris-based EU Fiscal Observatory, welcomed the outcome of the finance ministers’ meeting.
“For the first time in history, there is now a consensus among G20 countries that the way we tax the super-rich needs to be fixed, and a commitment to work together to do so. This is an important step in the right direction,” he said in a statement.
NGOs also welcomed the declaration and encouraged further action at the G20 summit in November.
Extreme weather events, made more likely by climate change, are expected to cost “trillions of dollars every year and it is absurd to expect the average taxpayer to pay for this,” Camila Jardim, international policy specialist at Greenpeace Brazil, said in a statement.
Brazil has placed inequality, poverty and hunger at the center of its G20 presidency. President Luiz Inácio Lula da Silva defended the need to increase taxes on the world’s richest in Rio on Wednesday when he revealed plans for a global alliance against hunger and poverty.
Brazil is also pushing for changes in global governance institutions and advocating for a sustainable energy transition.
On the sidelines of the tax talks, Haddad and Yellen announced on Friday the launch of a climate partnership between Brazil’s Finance Ministry and the U.S. Treasury.
It will seek to “address today’s most pressing environmental challenges and strengthen the region’s green economy,” Yellen said, citing efforts to bolster clean energy supply chains and improve the integrity and effectiveness of the voluntary carbon market.