Finance ministers of G20 countries reached an agreement on seeking to tax the super-rich effectively, in a statement adopted last Friday after a gathering in Rio de Janeiro.
“We will work together with consideration for each other’s jurisdictional tax prerogatives as we strive to ensure that the rich men are properly taxed,” declared the statement.
“Unequal distribution of wealth and incomes have been undermining economic growth, social cohesion and exacerbating societal vulnerabilities” it added.
The meeting in the Brazilian city that would be hosting a G20 summit in November was dominated by this touchy issue of going after billionaire tax dodgers.
The G20’s position on “tax fairness” was welcomed by IMF Director Kristalina Georgieva who described the move to collaborate on taxing the ultrarich as “timely and welcome.”
Who is behind this?
It is one of Brazil’s President Luiz Inacio Lula da Silva major priorities since he is chairing this year’s group of the world leading economies.
Lula wanted a 2% minimum tax for rich but this final declaration represents what has divided member states for long time already, so it became kind of compromise on divisive issue amongst members.
According to a report commissioned by Brazil from French economist Gabriel Zucman, billionaires currently pay 0.3% of their wealth in taxes.
A two percent rate would generate between $200 billion (€184 billion) and $250 billion (€230 billion) per annum globally from approximately 3000 individuals. This money could go towards public services like education and healthcare or be used to fight global warming according to Gabriel Zucman among others.
G20 split over the matter
However, while France, Spain, South Africa, Colombia and the African Union back a proposal for global taxation of billionaires; the United States and Germany were opposed to such agreements being made.
Although no specific global taxation policy was agreed upon in its final communique document, Brazilian Finance Minister Fernando Haddad has called it a “big step forward.”
“We were quite hopeful about this outcome, but the result went beyond our wildest expectations”, he said.
He stated that in the spirit of justice, it is essential for the twenty wealthiest countries to address the issue that progressive taxation should be performed on those who are poor rather than on those who are rich.
