For the moment, this is only a declaration of intent, the credibility of which will have to be measured in a few months. The G20 countries committed themselves, on Friday, July 26 in Rio de Janeiro (Brazil), to “cooperate” for the wealthiest people to be taxed more, in the name of fighting inequality. The issue dominated a two-day meeting of finance ministers from the group of major world economies, which was to prepare for the G20 summit of heads of state and government scheduled for November 18-19, also in Rio.
“In full respect of fiscal sovereignty, we will endeavour to cooperate to ensure that very wealthy individuals are effectively taxed”is it written in a statement on the “international tax cooperation” published at the end of the work. The text emphasizes that “Wealth and income inequalities undermine economic growth and social cohesion and exacerbate social vulnerabilities”and advocates “effective, fair and progressive tax policies”.
According to Brazilian Finance Minister Fernando Haddad, whose country is chairing the group this year, “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”.
During a closing press conference, the minister stressed that the G20 countries agree on the need to “working for more transparent, fair and equitable tax systems, including for the ultra-rich, who must contribute to more equal and sustainable societies”.
“The G20 Ministers’ shared vision on progressive taxation is timely and welcome, as the need to rebuild fiscal buffers while addressing social and development needs involves difficult decisions in many countries”International Monetary Fund Managing Director Kristalina Georgieva said in a statement. She said: “Promoting tax justice contributes to the social acceptance of these decisions”.
US and Germany Oppose Minimum Tax
Brazil, led by left-wing President Luiz Inacio Lula da Silva, has pushed for a minimum tax on the wealthy, but has not succeeded, particularly because of the US’s rejection of international negotiations on the subject: while the US wants the richest to pay their fair share, it considers taxation to be primarily the business of each country. Germany has openly displayed its hostility to an internationally negotiated tax.
Conversely, France, South Africa, Spain and the African Union have shown their support for an international tax on the super-rich.
Author of a report on the subject at the request of Brazil, the French economist Gabriel Zucman was pleased that “For the first time in history, G20 countries agree that the way we tax the super-rich needs to change”.
The statement released on Friday cites exchanges of best practices and the design of mechanisms to combat tax evasion, in order to launch international cooperation in tax matters.
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“It’s time to go further now”responded the American Nobel Prize winner in economics Joseph Stiglitz, calling for heads of state and government to give a mandate for coordinated minimum standards by November. “The climate crisis is expected to cost trillions of dollars each year and it is outrageous to expect ordinary taxpayers to pay for it while the super-rich escape taxes.”said Camila Jardim, international policy specialist at Greenpeace, renewing the NGO’s call for a global tax.
Three published texts
The road still looks long, any cooperation between States in matters of taxation being difficult by nature because the latter are jealous of their fiscal sovereignty.
With the G20 hampered by divisions between Western countries and Russia – also a member of the group – since the start of the war in Ukraine, drafting a joint communiqué remained a challenge. But Brasilia succeeded with the publication of three texts: the ” statement “ on taxation, a broader final communiqué and a document published separately by the Brazilian presidency, which alone mentions geopolitical crises.
The final communiqué signed by all countries makes no mention of the wars in Ukraine and Gaza, but simply refers to the “wars and the escalation of conflicts” as risk factors for the global economy.
The statement signed by the Brazilian presidency, for its part, reports that some countries “expressed their views on Russia and Ukraine and the situation in Gaza”Some members see the G20 as a relevant forum to discuss these issues, while others are of the opposite opinion.