In a move aimed at addressing global wealth inequality, G20 nations have pledged to improve taxation of the ultra-rich. This agreement, reached on Thursday and to be formally published on Friday, marks a significant step in balancing national tax sovereignty with international cooperation on tax evasion.
Brazil, which currently chairs the G20, led this initiative. President Luiz Inácio Lula da Silva, who has long advocated wealth tax reform, managed to put the so-called “billionaire tax” on the agenda. The declaration emphasizes a collaborative approach while respecting the fiscal sovereignty of each country. It suggests improving tax practices by sharing best practices and developing anti-evasion mechanisms.
The statement hints at a broader strategy that could involve academic input and support from international organizations such as the OECD and the UN. Brazil has proposed a 2% tax on fortunes exceeding $1 billion, which could potentially generate $250 billion annually from approximately 3,000 individuals.
Finance Minister Fernando Haddad highlighted the importance of engaging global experts and organizations to refine this approach. However, some G20 members have expressed caution about the viability of this ambitious plan. European Economic Commissioner Paolo Gentiloni acknowledged the significant challenges ahead, emphasizing that the initial focus would be to improve international information exchange.
US Treasury Secretary Janet Yellen supported the spirit of the initiative, but was cautious about the prospect of a new global fiscal policy. He reiterated that although progressive taxation is beneficial, coordinating a global tax policy could be problematic. Yellen emphasized that countries should focus on ensuring their own tax systems are fair and progressive.
The billionaire tax proposal targets some of the world’s richest people, including Elon Musk, Jeff Bezos and Bernard Arnault. With the richest 1% having accumulated $42 trillion in new wealth in the last decade, the gap between the rich and the less fortunate has widened significantly, according to Oxfam. This disparity underscores the need for more effective wealth distribution mechanisms.
The new G20 declaration is a crucial step in addressing these issues, although its success will depend on overcoming considerable implementation challenges.
