For the first time, finance leaders from G20 countries have agreed on a wealth tax on the world’s super-rich. This agreement, reached at a meeting in Rio de Janeiro, could raise around €230 billion to address issues like climate change and poverty. While a joint statement declared all countries’ commitment to “engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed,” underlying disagreements regarding the plan’s viability, oversight, and implementation persist. Some governments have privately expressed skepticism about its success.
Brazil, spearheading this initiative, has prioritized climate change and poverty in its G20 presidency this year. A report commissioned by Brazil and authored by French economist Gabriel Zucman revealed that billionaires currently pay a meager 0.3% of their wealth in taxes. Brazilian President Luiz Inacio Lula da Silva aimed for a minimum 2% tax on the richest 3,000 billionaires, potentially unlocking €184 billion to €230 billion annually for global public services.
Despite the theoretical agreement, certain countries have pushed back against the proposal, including Germany and the United States. While acknowledging the potential need for such an agreement, US Treasury Secretary Janet Yellen expressed reservations about negotiating a global accord. Experts emphasize the necessity of a global agreement to prevent countries from becoming tax havens for the ultra-wealthy.
Other countries, including South Africa, Colombia, and the African Union, support the initiative. Zucman acknowledged that it’s too early for countries to agree on his specific proposal but welcomed the G20’s consensus on the need for reform in taxing the super-rich.
Environmental campaigners have also lauded the consensus, hoping that a portion of the funds generated could be allocated to tackling the climate crisis. Camila Jardim, an international politics specialist for Greenpeace Brazil, highlighted the potential of taxing the super-rich to demonstrate the existence of sufficient resources for addressing the climate crisis, which is projected to cost trillions of dollars annually. Susana Ruiz, tax policy lead for Oxfam International, deemed the agreement a significant step towards international tax cooperation, asserting that the richest individuals can no longer evade their fair share of tax contributions.
