The G20 countries pledged Friday in Rio de Janeiro to “cooperate” to tax the super-rich more, in the name of fighting inequality, but stopped short of agreeing on a global tax. The issue dominated a two-day meeting of finance ministers from the group formed by the world’s 19 largest economies, the European Union and the African Union. The meeting was to prepare for the summit of G20 heads of state and government scheduled for November 18-19, also in Rio.
Driven by Brazil’s left-wing president Luiz Inacio Lula da Silvaat the head of the G20 this year, the idea of creating a minimum tax on the wealthy did not meet with consensus, but a compromise emerged to encourage everyone to tax them more. “With full respect for tax sovereignty, we will strive to cooperate to ensure that very wealthy individuals are effectively taxed,” said a statement on “international tax cooperation” published at the end of the work.
The text underlines that “inequalities in wealth and income undermine economic growth and social cohesion and aggravate social vulnerabilities”, and advocates “effective, fair and progressive tax policies”. In addition to Brazil, France, South Africa, Spain and the African Union supported an international tax on the super-rich. But the United States has rejected international negotiations on the subject: while it wants the richest to pay their fair share, it considers that taxation is first and foremost the business of each country.
Brazilian Finance Minister Fernando Haddad, however, expressed satisfaction. “From a moral point of view, it is important that the twenty richest nations consider that we have a problem which is to have progressive taxation on the poor and not on the rich,” he said at the closing press conference.
IMF applauds
Present in Rio, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, welcomed the G20’s position in favour of “tax justice”, judging the decision to cooperate in order to tax the richest to be “timely and welcome”. Author of a report on the subject at the request of Brazil, the French economist Gabriel Zucman was pleased that “for the first time in history, the G20 countries agree that the way we tax the super-rich must be changed”.
The statement, published on Friday, discusses exchanging best practices and designing mechanisms to combat tax evasion, in order to launch international cooperation on tax matters. “It is time to go further now,” said American Nobel Prize winner in economics Joseph Stiglitz, urging heads of state and government to give a mandate for coordinated minimum standards by November. For the NGO Greenpeace, which described Friday’s consensus as “historic”, “this is an important step for the G20 which recognizes for the first time the need to tax the super-rich.”
Three documents
With the G20 hampered by divisions between Western countries and Russia – also a member of the group – since the start of the war in Ukraine, but also over the Israeli offensive in Gaza, drafting a joint communiqué remained a challenge. But Brasilia was able to get around the obstacle with the publication of three separate texts: the “declaration” on taxation, a broader final communiqué and a document published separately by the Brazilian presidency.
The latter document, signed by the Brazilian presidency alone, reports that some countries “expressed their views on Russia and Ukraine and the situation in Gaza.” Some members see the G20 as a relevant forum to discuss these issues, while others are of the opposite opinion. The final communiqué signed by all countries, however, makes no mention of the wars in Ukraine and Gaza, but simply refers to “wars and the escalation of conflicts” as risk factors for the global economy.
G20 members also welcomed the “consensus” on Lula’s launch of a Global Alliance against Hunger and Poverty on Wednesday, and stressed the need to tackle climate change and environmental crises. Reaching a joint communiqué is “a victory for Brazil and the international community,” said Fernando Haddad. For him, international cooperation is “the antidote to the escalation of conflicts.”