Brazil, led by leftist Luiz Inácio Lula da Silva and chair of the G20 this year, had made the creation of a coordinated tax on the super-rich one of its priorities at the head of the bloc. But the world’s 19 largest economies, plus the European Union and the African Union, failed to agree on that goal.
In addition to Brazil, France, South Africa, Spain and the African Union have also expressed support for the idea of a global tax on the super-rich.
The United States, on the other hand, has rejected the idea of international negotiations on the issue, although it has advocated that each country should ensure that it has a “fair and progressive” tax system. Germany said before the G20 that it considers the idea “irrelevant.”
The commitment to international cooperation on tax issues represents a half-way solution.
“The mere fact that it is included in a G20 declaration” is “a lot,” applauded Brazilian Finance Minister Fernando Haddad.
“The 20 richest nations in the world believe that we have a problem, a progressive taxation of the poor and not of the rich,” he added at a press conference at the end of the meeting.
The final declaration states that “inequalities in wealth and income undermine economic growth and social cohesion and exacerbate social vulnerabilities.”
It also stresses the importance of “promoting effective, fair and progressive fiscal policies.”
The text cites exchanges of good practices and the design of mechanisms to combat tax evasion as possible ways of implementing this international cooperation, which is to be discussed at the G20 summit of heads of state and government on 18 and 19 November in Rio.
“Historical”
The managing director of the International Monetary Fund, Kristalina Georgieva, praised the G20’s position on Friday.
“The shared vision of G20 ministers on progressive taxation is timely and welcome, as the need to rebuild tax protections while addressing social and development needs involves difficult choices in many countries,” Georgieva said in a statement.
“Promoting tax justice helps ensure social acceptance of these decisions,” he added.
French economist Gabriel Zucman, a major promoter of the initiative and author of a report on the subject prepared at Brazil’s request, celebrated that “for the first time in history, the G20 countries have agreed that the way we tax billionaires must be changed.”
Nobel Prize-winning economist Joseph Stiglitz on Friday welcomed the serious debate on the “system of privileges for a handful of billionaires” and said it was “time to go further,” urging heads of state and government to move forward on coordinated minimum standards before November.
Greenpeace also welcomed the G20’s “historic” support for the initiative.
“It is an important milestone for the G20 to recognise for the first time the need to tax the super-rich and combat injustice and inequality. It is a strong signal of change,” said Marilia Monteiro Silva, campaign strategist at Greenpeace.
