In a joint ministerial statement released on Friday, finance ministers from major developed and developing countries pledged to work towards successfully taxing the ultra-rich.
“After the two-day meeting in Rio de Janeiro, we will endeavor to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed, with full respect to tax sovereignty,” the statement read.
As part of its leadership of the Group of 20, Brazil has proposed a 2% minimum tax on billionaires, making it a high goal before the summit in Rio on November 18–19.
Fernando Haddad, the finance minister of Brazil, hailed the final declaration as a “significant step forward,” even though it does not agree on a precise global tax.
Although we were always hopeful about the outcome, Haddad said, “It exceeded our initial expectations.”
Brazil’s plan to tax billionaires has caused division among G20 countries. The United States is opposed, but South Africa, France, and Spain have stated their support.
U.S. Treasury Secretary Janet Yellen told reporters on Thursday that “tax policy is complicated to coordinate globally, and we don’t see a need or think it’s desirable to try to negotiate a global agreement on that.”
If each nation independently implemented such a tax, governments would be afraid that the very wealthy would move their wealth to tax havens, according to economist Rogério Studart, a senior fellow at the Brazilian Centre for International Relations think tank.
Everyone benefits when collaborative action is taken. Many people lose when there is fragmentation, according to Studart.
Ten years after the financial ministers met, the richest 1% have gained $42 trillion in additional wealth, almost 36 times th wealth of the poorest 50% of the global population, according to an Oxfam analysis released on Thursday.
Billionaires presently pay taxes equal to 0.3% of their wealth, based on a study by Gabriel Zucman that Brazil commissioned.
According to the analysis, a 2% tax would raise $200 billion to $250 billion annually from roughly 3,000 people worldwide.
This money could be used to pay for public services like health care and education and the battle against climate change.
The founding director of the EU Tax Observatory, located in Paris, Zucman, praised the conclusion of the conference of finance ministers.
“The G20 countries have committed to cooperating to repair the super-rich tax system, reaching an agreement for the first time in history. It’s a significant step in the right direction, the statement he provided said.
NGOs also applauded the declaration urging more action during the G20 meeting in November.
According to a statement from Greenpeace Brazil’s Camila Jardim, an international politics specialist, extreme weather events become more likely by climate change are predicted to cost “trillions of dollars every year and it is outrageous to expect that the regular taxpayer should pay for it.
Brazil has made hunger, poverty, and inequality the main priorities of its G20 leadership.
Laptops 1000When he outlined proposals for a worldwide alliance against hunger and poverty on Wednesday in Rio, President Luiz Inacio Lula da Silva defended the necessity for increased taxes on the world’s wealthiest people.
Brazil is also promoting a sustainable energy transition and pushing for changes to the institutions that make up global governance.
Amidst the tax talks, Haddad and Yellen declared on Friday that the U.S. Treasury and Brazil’s Ministry of Finance would be forming climate collaboration.
Citing initiatives to support renewable energy supply chains and enhance the integrity and efficacy of the voluntary carbon market, Yellen stated that it will aim “to address today’s most pressing environmental challenges and strengthen the region’s green economy.”
