A “historic” decision. The G20 countries, meeting for two days in Rio de Janeiro, committed on Friday to “cooperating” so that the super-rich are taxed more, in the name of the fight against inequality, but without going so far as to agree on a global tax.
Brazil, led by leftist President Luiz Inacio Lula da Silva this year, has been pushing the idea of creating a minimum tax on the wealthy for months. The proposal ultimately failed to gain consensus at a meeting of finance ministers from the group, which includes the world’s 19 largest economies, the European Union and the African Union, but a compromise was reached to encourage everyone to tax them more.
“With full respect for tax sovereignty, we will seek to cooperate to ensure that very wealthy individuals are effectively taxed,” said a statement on “international tax cooperation” published at the end of the work. The text underlines that “inequalities in wealth and income undermine economic growth and social cohesion and exacerbate social vulnerabilities,” and advocates “effective, fair and progressive tax policies.”
“From a moral point of view it is important that the twenty richest nations consider that we have a problem which is to have progressive taxation on the poor and not on the rich,” said Brazilian Finance Minister Fernando Haddad at the closing press conference.
A decision welcomed by economists
In addition to Brazil, France, South Africa, Spain and the African Union supported an international tax on the super-rich. But the United States has rejected international negotiations on the subject. While it wants the richest to pay their fair share, it considers that taxation is first and foremost the business of each country.
Present in Rio, the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, welcomed the G20’s position in favour of “tax justice”, judging the decision to cooperate in order to tax the richest to be “timely and welcome”.
Author of a report on the subject at the request of Brazil, French economist Gabriel Zucman welcomed the fact that “for the first time in history, the G20 countries agree that the way we tax the super-rich must be changed.” The declaration published on Friday mentions exchanges of good practices and the design of mechanisms to combat tax evasion, in order to launch international cooperation on tax matters.
“It is time to go further now,” said American Nobel Prize winner in economics Joseph Stiglitz, urging heads of state and government to give a mandate for coordinated minimum standards by November.
Other “consensus”
For the NGO Greenpeace, which described Friday’s consensus as “historic”, “this is an important step for the G20 which recognises for the first time the need to tax the super-rich”. This meeting was to prepare the summit between heads of state and government of the G20 scheduled for 18 and 19 November, also in Rio.
G20 members also welcomed the “consensus” on Lula’s launch of a Global Alliance against Hunger and Poverty on Wednesday, and stressed the need to tackle climate change and environmental crises.