The G20 will not issue a statement of “explicit” support for a “coordinated” tax on billionaires, as confirmed to elDiario.es by sources from one of the governments participating in the international economic forum. In return, the G20 will publish a statement this Thursday in which it commits to continue debating and advancing on the minimum tax for the super-rich, as promoted by the Brazilian presidency.
This declaration will be a “separate statement” on “tax cooperation”, separate from the final document of the G20 currently held in Rio de Janeiro and due to be released on Friday. This “declaration” will be less ambitious than expected, although “it can be considered a historic step”, says another source familiar with the negotiations who preferred not to be quoted. “There is no explicit support for the tax. There is a commitment to continue working together and evaluating it, and to continue debating it and sharing information”, elDiario.es has learned.
According to the same sources, the main obstacle is the opposing position of the German Finance Minister, Christian Lindner, despite the fact that the technical discussions had developed towards an agreement on a favourable position. “On the budgetary front, I can say that all the issues raised by the Brazilian Presidency are included in the document. including taxes for the super richThis was announced on Tuesday by Tatiana Rosito, coordinator of the G20 financial table, after the meeting of technicians from the participating states and central banks.
The definitive step towards fairer taxation will have to wait, even though the finance ministers of the main world powers have accepted “the positive assessment” of their ‘sherpas’ – as is known from the technicians of each government who study the issues and discuss their ‘bosses’ decide on a consensus statement. “There is still much to do, but this is the beginning, a starting point that recognizes the problem and the promise that it must not be solved only with national measures, but with international coordination”, according to the sources consulted by elDiario.es.
“There is already a language that recognises the need to recognise wealth. And there is also a good diagnosis that all the ministries agree on. “It is a good sign,” they continue. The details of this ‘new agenda’ that is opening up ‘are what will happen to the South African presidency of the G20.’
A historic step
“A summer of taxes on billionaires has been officially declared,” French economist Gabriel Zucman declared euphorically a few weeks ago on the social network X (formerly Twitter). “With Brazil’s leadership in the G20, the victory of Labour in Britain, the victory of the left in France and the growing demand everywhere to put an end to the great tax injustice of our time, the time has come,” said this expert on “tax shelters,” who was tasked by the Brazilian presidency of the international economic forum to propose a minimal and coordinated tax on the super-rich in order to provoke a debate.
The G20 is made up of the main economies of each continent, including countries that do not fully align with the G7 powers (USA, the entire EU, the UK or Japan), such as Saudi Arabia, Russia, China, India, Argentina, South Africa, Brazil or the African Union, and in which Spain is a “permanent guest”. The Minister of Economy, Carlos Body, announced at the end of April his support for “a tax on the super-rich” and “a new agenda to combat inequality worldwide” in an open letter signed together with the Senate, Vice President and Minister of Finance, María Jesús Montero, the Minister of Finance of South Africa, Enoch Godongwana, the Minister of Finance of Brazil, Fernando Haddad, and, surprisingly, together with the Minister of Economic Cooperation and Development of Germany, Svenja Schulze.
Lindner, however, belongs to the German Liberal Party, which governs in coalition with Scholz's SPD and the Greens, and has a different position than his compatriot. In short, 'not to raise taxes'.
So far, the movement toward fairer taxation has gained momentum from voices outside the left. In June, G7 finance ministers reached “another historic agreement.” a minimum tax on the profits of multinationals of 15% and they dedicated themselves to 'fighting tax evasion'. These positions reflect a slowness that has emerged in other leading organisations (OECD, IMF…) and that has leaked to prestigious speakers such as the Financial Times. 'We are one step closer to taxing the super-rich', the newspaper headlined a forum published by the newspaper specialized in economic information in May.
Of course, the proposal designed by Zucman also encountered resistance. The most relevant was that of the United States Secretary of the Treasury, Janet Yellen, who, after the G7 in May, expressed her discomfort with the idea of “a minimum tax of 2% that would hit about 3,000 of the richest people in the world – with more than $1 billion, measured in terms of wealth, not income –.” In total, according to the French economist’s calculations, $250 billion would be raised “for the fight against climate change and poverty.”
33 million euros per hour
“Did you know that EU governments could win? 33 million euros per hour with a small tax on the super-rich?” asks a campaign by Oxfam, one of several organizations pushing for the tax. Some of them have been launched the European Citizens' Initiative (ICE), known as 'Tax The Rich'which has among its promoters the young German billionaire Marlene Engelhorn and renowned economists such as Thomas Piketty. “The aim is to collect a million signatures to urge the new European Commission to create a new agenda for wealth taxation.”
According to this initiative, a new tax on large fortunes would generate significant additional resources that could be allocated to investments for social inclusion and a fair ecological transition in the countries of the European Union, as well as to increase the Community budget for social security policies, international development cooperation and climate finance.
27 Billionaires in Spain
In our country, the union of technicians of the Ministry of Finance, Gestha, has calculated that “a globally coordinated tax added to the current property tax would generate more than 27 large fortunes above 1,000 million.” In Spain, there are taxes on heritage transferred to the Autonomous Communities – which Madrid, Andalusia, Cantabria and Extremadura have reduced to 100% – and the Solidaridad de Grandes Fortunas tax, which was recently introduced.
The Treasury Department technicians agree with Gabriel Zucman that “the largest fortunes pay proportionally less tax than the majority of the population,” and remember “that income taxes tax more favorably the capital income” received by the wealthy.
“The main instrument of progressivity is personal income tax, but it is not applied effectively to very wealthy people. For example, a large fortune receiving one million euros in dividends has an effective tax rate of 26.78%. the same as that of employees or self-employed persons who earn 42,092.64 euros“, criticize the technicians of the Ministry of Finance.
According to recent research by the EU Fiscal Observatory, billionaires pay little (through wealth and income taxes) between 0 and 0.5% of their wealth. “This lack of progressivity contrasts with the high inequality. In Europe, the richest 1% own almost half of all financial wealth on the continent,” warns Oxfam Intermón.
This organization defends that the report being studied by the G20 is “a rigorous and reasonable proposal, which offers concrete and essential solutions to a tax system that allows the ultra-rich to pay very little tax. The agreement reached to tax the super-rich must be ambitious and significant enough to also deal with inequality.” This ambition is being questioned in Spain, after Carlos Corpus stated that The tax reform that all experts are calling for has already been implementeddifficult to the attention of the European Commission.
'Tax the rich'
“All G20 countries should support Brazil’s bid for the first ever deal to tax the super-rich. The recent pact for minimum taxation of large multinationals, although imperfect, shows that it is possible to promote greater coordination at a global level to close the deep holes in the international tax system that only benefit the very wealthy,” Íñigo Macías, head of research at Oxfam, explained to elDiario.es a few weeks ago.
“In practice, the main obstacle to taxing the super-rich is the risk that they will hide their income or move it to countries with lower tax requirements. Overcoming this problem requires international coordination, more information sharing and a common standard,” Zucman himself stressed.
“The high debt burdens after the pandemic, the new budget rules that have been introduced and the necessary just ecological transition that EU countries are facing make it necessary to guarantee additional resources if we want to avoid a return to austerity,” they add from Oxfam.