G20 agree to work on Brazil’s ‘billionaire tax’ idea, implementation seen difficult

Rio de Janeiro – The world’s 20 biggest economies (G20) agreed on Thursday to collaborate to guarantee that the ultra-rich are adequately taxed, in a declaration aimed at striking a balance between national sovereignty and more cooperation on tax dodging.

The proclamation, which will be published on Friday, was a priority for Brazil, which is chairing G20 negotiations this year and whose leader, Luiz Inacio Lula, a former factory worker, has pushed to include the “billionaire tax” on the agenda.

“With full respect for tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed,” the G20 tax declaration, seen by Reuters, stated.

“Cooperation could involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices,” according to the statement.

Brazil has sparked debate over a proposal to apply a 2% wealth tax on fortunes above $1 billion, with an expected revenue of up to $250 billion per year from 3,000 persons.

“What started today is a broader process that will require the participation of academia, scholars, and international organizations with experience and time, such as the Finance Minister Fernando Haddad OECD and the UN,” told reporters.

Others in the G20, while supportive, emphasized how difficult it will be to implement the deal.

“We are all aware that we are embarking on a very difficult process,” European Economic Commissioner Paolo Gentiloni remarked on the sidelines of the G20 summit.

“The initial stage will be to focus on information exchange across countries. It will be a topic to explore in the coming months and years.”

US Treasury Secretary Janet Yellen praised the spirit of the declaration’s debates, but cautioned against a new global tax policy, adding that US President Joe Biden had proposed many measures to that effect, including a “billionaires tax.”

“We believe that most countries would benefit from adopting this progressive taxation system. And we are glad to collaborate with Brazil on this and spread these ideas throughout the G20,” she told reporters at the meeting.

“But tax policy is very difficult to coordinate worldwide, and we don’t see a necessity or believe it is desirable to try to reach a global consensus on it. We believe that all countries should ensure that their tax systems are fair and progressive.

The “billionaire tax” would target the world’s wealthiest individuals, including Tesla and Space X founder Elon Musk, whose fortune Forbes magazine estimates to be around $235 billion, Amazon founder Jeff Bezos, who is worth around $200 billion, and French luxury goods tycoon Bernard Arnault, who is worth around $180 billion.

According to Oxfam, the richest 1% have generated $42 trillion in new wealth over the last decade, roughly 34 times more than the bottom half of the world’s population, resulting in increased wealth disparity.

According to Oxfam, the average wealth per person in the top 1% increased by about $400,000 in real terms over the last decade, while a person in the bottom half saw only a $335 gain, or less than nine cents per day.