Finance leaders from all G20 countries have reached a historic agreement to tax the world’s billionaires. During meetings in Brazil, treasury ministers and central bankers from the group of 20 major economies issued joint statements referencing fair taxation of “ultra-high-net-worth individuals”. This marks the first time such a measure has been unanimously agreed upon by the world’s largest economies.
However, the agreement did not come without its challenges. Disagreements over how to implement the tax have raised concerns about the viability of the plan. Despite this, Oxfam International, a global organization dedicated to fighting poverty, has hailed the agreement as a significant step forward. Susana Ruiz, Oxfam’s tax policy lead, stated, “This is a serious global progress – for the first time in history, the world’s largest economies have agreed to work together to tax the ultra-rich.”
Ruiz further emphasized the importance of this measure, stating, “Governments have been complicit for too long in allowing the ultra-rich to pay little or no taxes. These massive fortunes give the world’s wealthiest individuals disproportionate influence and power, which they use to shield and increase their wealth, ultimately undermining democracy and perpetuating inequality.”
Currently, billionaires only pay an average of 0.3% of their wealth in taxes, as reported by economist Gabriel Zucman, who was commissioned by Brazil, the host of this year’s G20 meetings. Zucman’s report suggests that a 2% tax on the world’s richest 3,000 individuals could generate $250 billion annually, which could be used to fund crucial public services such as education, healthcare, and the fight against climate change.
Speaking on the issue, Brazil’s finance minister Fernando Haddad stated, “The world has a problem of progressive taxation on the poor and not on the rich. The less wealthy you are, the more taxes you pay. This is almost a rule.”
The issue of climate change was also addressed, with campaigners highlighting that the actions of billionaires, such as their polluting lifestyles with private jets and superyachts, contribute significantly to the global crisis. As the world’s largest economies, the UK, EU, and US are among the biggest contributors to climate change, while developing nations like Burundi, Somalia, and Mozambique are disproportionately affected.
Brazil, which is leading the proposed tax, has made tackling poverty and climate change a priority during its presidency of the G20 meetings this year. The nation will also host the annual United Nations climate summit, COP30, in 2025. However, the proposal has created a divide among the G20 countries, with France, Spain, and South Africa expressing support while the US remains resistant.
The joint communique issued by all G20 countries on Friday stated that they will “engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed”. However, there is also a disagreement over who should oversee the process. The US backs the Organisation for Economic Co-operation and Development (OECD), while campaigners argue that the United Nations, a more inclusive and trustworthy organization, should manage it.
US Treasury Secretary Janet Yellen stated, “We don’t want to see this shifted to the UN.” She further explained that the OECD, a consensus-based organization, has made significant progress on the issue, and the UN does not have the technical expertise to handle it.
Supporters of the billionaire tax argue that it needs to be implemented internationally to prevent the wealthy from simply moving their assets to avoid taxation. However, the complexity of its implementation cannot be overlooked. To make this tax a reality, G20 leaders must show their commitment and support for coordinated efforts and guidelines when they convene for their annual summit in November.
Despite the progress made, some experts remain skeptical about the feasibility of a global “billionaire tax” targeting the world’s wealthiest individuals. Even the European Union, made up of 27 countries, struggles to reach a consensus on taxation. While some countries may be hesitant to publicly criticize the proposal, it remains a divisive issue within the EU.
A spokesperson for the UK government stated, “The UK has a progressive tax system, which is crucial for economic growth and enables us to fund essential public services in a fair manner.” The UK has been actively involved in addressing modern global tax challenges, including the two-pillar global tax agreement and improving the exchange of information between jurisdictions.
