After some debate, G20 finance ministers have agreed to continue discussing a proposed global wealth tax. Following a two-day meeting in July, their joint declaration stated: “With full respect for tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed.” While this doesn’t constitute an immediate victory, it is a significant coup for advocates of the tax. This commitment keeps the conversation alive and paves the way for potential breakthroughs in global tax reform.
Brazilian President Luiz Inacio Lula da Silva, holding the G20 presidency this year, presented a much-lauded proposal for a global wealth tax on billionaires at a meeting of the group’s finance ministers last month. The plan proposes a 2 percent minimum tax on the wealth of around 3,000 of the world’s richest individuals, aiming to close tax loopholes and, in turn, potentially raise $250 billion annually. Despite initial support from France, Spain, Colombia, Belgium, the African Union and South Africa, the plan also faced significant challenges. Germany dismissed it as “irrelevant,” and U.S. Treasury Secretary Janet Yellen voiced skepticism. Yet, the recent commitment to further discussions leaves the door open for forward movement.
There has been a surge in proposals for global wealth taxes in recent years, driven by growing public dissatisfaction with wealth disparities and the exploitation of tax loopholes. While the world’s richest 1 percent possess more than twice the wealth of 6.9 billion people, nearly half the global population struggles to survive on less than $5.50 a day. According to Oxfam, the top 1 percent saw their fortunes increase by $40 trillion over a decade while taxation rates fell to historic lows. The Tax Justice Network reports that global tax avoidance costs governments $427 billion annually. Meanwhile, some governments resort to lethal force against protesters opposing crippling tax burdens.