Fri | Apr 12, 2024

Brazil’s finance minister proposes global tax on the superrich at G20 meeting in São Paulo

Published:Sunday | March 3, 2024 | 12:06 AM
Brazilian Finance Minister Fernando Haddad, centre, speaks during the G20 Finance Ministers and Central Bank Governors meeting in Sao Paulo, Brazil, Thursday, February 29, 2024.
Brazilian Finance Minister Fernando Haddad, centre, speaks during the G20 Finance Ministers and Central Bank Governors meeting in Sao Paulo, Brazil, Thursday, February 29, 2024.

Brazil’s finance minister told his peers Thursday at a G20 meeting in São Paulo that countries should implement a global tax on the superrich in an effort to tackle rampant tax evasion.

Fernando Haddad said tax evasion can be resolved through international cooperation so that “these few individuals make their contribution to our societies and to the planet’s sustainable development”.

He added that Brazil is pushing for a declaration on international taxation by G20 members that he hopes would be ready in July. But in a press conference at the end of the meeting, he recognised that the path would be far from smooth.

“There will be a lot of debate about this, which is absolutely natural, especially because not every country feels the same way about this problem that was brought to the G20 by Brazil,” he said.

Brazil currently has the presidency of the 20 leading rich and developing nations and President Luiz Inácio Lula da Silva has put issues that concern the developing world – such as the reduction of inequalities and the reform of multilateral institutions – at the heart of its agenda.

“Brazil has a role to play, a legitimacy to use on the issues that need to be addressed and that are not always represented in the G20,” Haddad said, pointing to environmental, social, and fiscal issues.

According to a 2023 study by advocacy group Tax Justice Network, countries around the world could lose up to US$4.8 trillion in tax revenue over the next decade due to tax havens. And a report earlier this year by the EU Tax Observatory cited by Haddad found that billionaires worldwide have effective tax rates equivalent of between 0% and 0.5% of their wealth.

In recent years, scandals such as the Panama Papers Leak and the Paradise Papers have shone a light on the pervasiveness of tax evasion and avoidance in business practices.

Meanwhile, the gap between the superrich and the bulk of the global population has been supercharged since the coronavirus pandemic, according to anti-poverty organisation Oxfam International.

“There are fewer taxes on assets today than two or three decades ago. The global movement has tended towards reducing taxation on companies and wealth,” said André Vereta-Nahoum, a sociology professor at the University of Sao Paulo.

But with inequalities soaring, more are calling for higher taxes on the wealthy – including United States President Joe Biden, who has pushed for a billionaire minimum income tax although the likelihood of Congress passing that proposal is minimal.

In a sign of growing global consensus on the matter, the United Nations General Assembly adopted a resolution late last year backing stronger international tax cooperation to “make it fully inclusive and more effective”.

“The difficulty is no longer putting the issue on the table. The data is there. The difficulty is arriving at a common document,” said Carla Beni, an economist from the Getulio Vargas Foundation, a university and think tank.

AP