WEALTH TAX: Plan to tax super-rich divides at G20 meet in Rio

Brazil’s vision for a global deal to tax the ultra-rich sparked divisions Thursday at a meeting of G20 finance ministers in Rio de Janeiro, where Washington dismissed the need for an international accord on the matter.

The initiative, discussed at an afternoon meeting, is a key priority for Brazil’s leftist president Luiz Inacio Lula da Silva, who this year heads the G20 grouping of the world’s major economies, the European Union and the African Union.

Even before talks began, US Treasury Secretary Janet Yellen dampened the mood by saying there was no need for a global agreement on taxing billionaires.

“Tax policy is very difficult to coordinate globally,” she told journalists. “We think that all countries should make sure that their taxation systems are fair and progressive.”

However, those backing the plan saw having it on the agenda as a key first step.

After the meeting, Brazil’s Economy Minister Fernando Haddad expressed his confidence in the initiative, and said a final “declaration” to be published Friday would mark a “first step.”

This communique will take up the “Brazilian proposal to start looking at international taxation, not only from the point of view of companies, but also from the point of view of individuals called the super-rich.”

According to a draft of the declaration seen by AFP, G20 members would “seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed.”

“Wealth and income inequalities are undermining economic growth and social cohesion and aggravating social vulnerabilities,” read the text of the draft.

It added that international cooperation could help promote “fair, and progressive tax policies” without mentioning any taxes negotiated at the international level.

One participant at the meeting, speaking on condition of anonymity, told AFP: “There is no consensus today to create a global tax on the capital of multimillionaires.”

“The idea is to have the theme on the agenda and the first steps discussed.”

– ‘Irrelevant’ –

Brazil’s search for a global agreement on taxing the richest of the rich is backed by France, Spain, South Africa, Colombia and the African Union.

“Some individuals control more resources than entire countries,” Lula said Wednesday at the launch of an initiative to fight world hunger, another project topping his G20 agenda.

Haddad told local media Wednesday that taxing billionaires would help finance the fight against hunger.

Global inequality has continued to widen in recent years, according to a study by the non-governmental organization Oxfam published Thursday.

The richest one percent of the world have earned more than $40 trillion in a decade, but their taxation is at “historically” low rates, the study said.

French economist Gabriel Zucman, a consultant with the G20 on taxation issues, estimates that the tax rate for billionaires represents 0.3 percent of their wealth.

“For the first time in history, there is now a consensus among G20 countries that the way we tax the super-rich must be fixed, and a commitment to work together for this. It’s an important step in the right direction,” he told AFP.

Washington is not the only skeptic.

On the eve of the G20 meeting, Germany’s finance ministry said it considers the idea of a minimum wealth tax to be “irrelevant.”

– Divisions over Ukraine, Gaza –

The meeting of finance ministers in Rio opened with a session on the global economy, as inflation slows in many parts of the world after a surge fuelled by the war in Ukraine and other factors.

On Friday, the ministers will tackle the financing of the climate transition and debt in their last meeting before a G20 summit on November 18 and 19.

Founded in 1999, the Group of 20 assembles 19 of the world’s largest economic powers, as well as the European Union and the African Union.

The organization was originally focused on global economic issues but has increasingly taken on other pressing challenges — even though member states do not always agree on what should be on the agenda.

Brazil’s presidency said in a statement that member states were divided over whether crises such as the conflicts in Ukraine and Gaza should be addressed at the G20.

Divisions within the G20, of which Russia is also a member, have made drafting a joint communique at the outcome of meetings a challenge.

The last meeting of finance ministers in Sao Paulo failed to issue such a statement.

Brazil hopes to publish three texts after the meeting, said Tatiana Rosito, a senior official at the country’s economy ministry.

Aside from a joint final communique, this would include a document on “international cooperation in tax matters” and a separate communique from Brazil on geopolitical crises.