G20 member countries have pledged to collaborate on increasing taxes on the super-rich as a measure to combat inequality, although they failed to agree on implementing a “global tax.”
This topic was one of the main points of discussion at the two-day meeting of the group’s finance ministers in Rio de Janeiro, which includes 19 of the world’s largest economies, the European Union (EU), and the African Union (AU).
The meeting, which concluded two days ago, was intended to prepare for the G20 summit of heads of state and government scheduled for November 18th and November 19th, also in Rio.
The idea promoted by Luiz Inacio Lula da Silva, Brazil’s leftist president and the current chair of the G20, of creating a minimum tax for the wealthiest individuals, was not accepted by consensus. However, a compromise was reached to encourage all member countries to implement higher taxes.
“With full respect for fiscal sovereignty, we strive to cooperate in a way that ensures the wealthiest individuals are effectively taxed,” said Lula da Silva in a declaration on “international fiscal cooperation” issued at the end of the meeting.
The text emphasizes that wealth and income inequalities threaten economic growth and social cohesion and increase the vulnerability of sensitive social groups. It states that member countries advocate for an effective, fair, and progressive fiscal policy.
Besides Brazil, the initiative to tax the super-rich is supported by France, South Africa, Spain, and the AU.
The United States (U.S.) rejected international negotiations on this topic: although they support the idea that the wealthiest should pay their fair share, they believe tax matters should be handled individually by each country.
Brazilian Finance Minister Fernando Haddad expressed satisfaction with the outcome.
“From a moral standpoint, it’s significant that the twenty richest countries recognize we have a problem, which is that we have a progressive fiscal policy applied to the poor, not the rich,” he said at the final press conference.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva, who attended the meetings in Rio, welcomed the G20’s stance in favor of “fiscal justice” and viewed the decision to cooperate on taxing the wealthiest as a positive step.
Gabriel Zucman, the French economist who authored a report on the subject at Brazil’s request, hailed the fact that, for the first time in history, G20 countries agreed that the taxation of the super-rich needs to be reformed.
The declaration issued two days ago mentions exchanging best practices and developing mechanisms to combat tax evasion to initiate international cooperation on this issue.
“Now is the time to move further,” said a U.S. Nobel laureate in economics Joseph Stiglitz, urging heads of state and government to approve the introduction of minimum coordinated standards on this matter by November.
Greenpeace, the non-governmental organization, considered the consensus reached on Friday as historic, marking an important phase for the G20 in recognizing the need to tax the super-rich.
The G20 has been blocked by divisions between Western countries and Russia, also a member of the group, since the beginning of the war in Ukraine, but also over the Israeli offensive in Gaza, drafting a joint statement remained a major challenge.
Brazil managed to navigate this obstacle by releasing three separate texts: a statement on taxes, a broader final communiqué, and a document published separately by the Brazilian presidency.
In the latter document, signed solely by the G20 chair, Brazil, it is noted that some countries expressed views on Russia and Ukraine and the situation in Gaza.
Some G20 members also welcomed the “consensus” on Lula’s initiative to launch a global alliance against hunger and poverty and emphasized the need to address climate change and ecological crises.
