31.07.2024

A tax on the super-rich could be key to combating climate change

For the first time, financial leaders from the G20 countries agreed on a tax on the wealth of the world's richest. The move could raise around €230 billion to tackle issues such as climate change and poverty.

The wealth tax was proposed at a meeting between finance ministers and central bankers from the world's largest developed and emerging economies in Rio de Janeiro. A joint statement issued last week said all countries had agreed to cooperate to ensure the ultra-high net worth were taxed effectively.

Beneath this consensus, however, simmers disagreement over whether the plan is viable, who will oversee the process, and how to actually introduce a tax on the super-rich.

Some governments are skeptical that the idea will be successful, he reports Euronews.

Is there support for a tax on the super rich?

Brazil is leading the campaign for a tax on the super-rich. The country has put climate change and poverty high on the agenda for its presidency of the G20 meetings this year ahead of hosting the UN climate conference COP30 in 2025.

A report by French economist Gabriel Zucman, commissioned by Brazil, found that billionaires currently pay the equivalent of 0,3 percent of their wealth in taxes. With a minimum 2 percent tax on the richest 3000 billionaires, between 184 and 230 billion euros would be provided globally each year.

The report said this money could fund public services such as education and health, along with the fight against climate change.

Despite the agreement in theory, some countries opposed the proposal, including German Finance Minister Christian Lindner and US Treasury Secretary Janet Yellen.

Yellen told reporters in Rio that the US sees the need for a global agreement on such a tax.

According to experts, such an agreement is necessary to avoid turning some countries into tax havens for the super-rich.

France, Spain, South Africa, Colombia and the African Union - a continental union of 55 member states - support the initiative.

Zucman said it was too early for countries to agree on his proposal, but welcomed the consensus among G20 countries that the way the super-rich are taxed needs to be fixed.

Eco-activists welcome the idea

The consensus was also welcomed by environmental activists who hope that some of the funds such a tax could raise could be used to tackle the climate crisis.

“We often hear that there is not enough money to solve the climate crisis, which will cost trillions of dollars every year. But taxing the super-rich can solve this shortage," says Camila Jardim, international policy specialist for Greenpeace Brazil.

Oxfam International's head of tax policy, Susana Ruiz, called the decision "a major global advance" in international tax cooperation.

"It was time to tell the world's richest people that they cannot game the tax system or avoid paying their fair share," she said.