The first report in the series Voices of the G20: Citizen Perspectives presents the view of experts associated with civil society organizations on the taxation of billionaires. There is a consensus that the tax proposal should be linked to financing measures to tackle inequalities and the climate crisis.
Taxing billionaires is crucial to tackling inequalities in the world. Civil society organizations have also been concerned in recent years about the advancement of the debate on a progressive taxation mechanism in response to the many recent crises. Articulated to follow up on the debate in other international spaces, such as the OECD (Organization for Economic Co-operation and Development) and the United Nations, the groups seek structural solutions to advance the agenda and strengthen the economies and populations of countries, especially in the Global South.
Livi Gerbase, a researcher for Latin America and the Caribbean at CICTAR (Centre for International Corporate Tax Accountability and Research), points out that income inequality between rich and poor is at alarming levels, and part of the problem is the non-taxation of billionaires. "The issue has also become relevant because in recent years several countries have individually and collectively implemented reforms to make their tax systems more progressive, demonstrating that it is possible to correct the flaws that favor the richest and multinationals," she argued.
For Viviana Santiago, executive director of OXFAM Brasil, a global agenda for the taxation of billionaires is fundamental in a movement of non-tolerance for society's intense income concentration. She also points out the urgency of measures to prevent the wealth drain and the "complete intolerance" of extreme levels of inequality and suggests that the debate needs to be held immediately.
"Postponing the discussion on taxing the super-rich impacts the global capacity to manage the climate crisis, hunger, and a just income that enables everyone to live a dignified life. The very resources that are not collected from the super-rich through fair taxation are those that could finance the climate issue, make it possible to improve public policies, and finance health and social assistance systems worldwide, which make it possible for the state to redistribute income," emphasized Santiago.
"Postponing the discussion on taxing the super-rich impacts the global capacity to manage the climate crisis, hunger, and a just income that enables everyone to live a dignified life. The very resources that are not collected from the super-rich through fair taxation are those that could finance the climate issue, make it possible to improve public policies, and finance health and social assistance systems worldwide, which make it possible for the state to redistribute income," emphasized Santiago.
The Global South's turn at the UN
In 2023, the United Nations began the process of negotiating a UN Framework Convention on International Tax Cooperation. According to Florencia Lorenzo, a researcher at the Tax Justice Network, the action is essential because, unlike other tax reform proposals that benefit high-income countries, this document promises more inclusive measures, especially for nations in the Global South.
The international community's long-standing concern has been the need to engage in debates on solutions to inequalities caused by tax issues. Other attempts were made in the OECD, with the endorsement of the G20, but they failed to consider the specificities of small and medium-sized economies.
Lorenzo explains that they often favored the wealthiest nations in processes with little transparency and representation of developing countries. "It's hard to overstate the importance of this mechanism and how hopeful we are about these negotiations. This process has the potential to change the trajectory of a regime that, in a hundred years, has repeatedly been unable to respond to the tax challenges of its time," said Lorenzo.
In the same vein, according to Nathalie Beghin from Brasil's INESC (Institute of Socioeconomic Studies), OECD countries' resistance to taxing billionaires in the G20 occurs because "they feel they are losing ground, and they are."
"It's interesting to see the dispute between the rich, who don't want to lose their privileges, and the impoverished, who want their rights met. As there are countries in the G20 that are not necessarily part of the Organization, such as Brasil, which among others defends taxing the super-rich, some gaps are being created and this allows the debate to be moved to the United Nations. I hope that issues like this will be addressed in the final communiqué," analyzed the economist.
"It's interesting to see the dispute between the rich, who don't want to lose their privileges, and the impoverished, who want their rights met. As there are countries in the G20 that are not necessarily part of the Organization, such as Brasil, which among others defends taxing the super-rich, some gaps are being created and this allows the debate to be moved to the United Nations. I hope that issues like this will be addressed in the final communiqué," analyzed the economist.
Funding to tackle inequalities
Beghin highlights the urgency of mobilizing additional public resources to address these challenges. The expert argues that although it is common to talk about the scarcity of public resources, effective measures to generate new income exist, such as progressive taxation and the establishment of global rules that prevent tax evasion.
According to the expert, the proposal to tax billionaires aims to leverage resources to tackle hunger, poverty, and climate change and ensures that these funds are public. Beghin emphasizes the importance of this distinction: "It is crucial that the resources to deal with the consequences of crises are public, not private with extremely expensive contracts that no one can afford or that jeopardize people's lives," she concluded.
To this end, international civil society has played a crucial role in pushing forward the debate on taxing large fortunes. As Oxfam's director points out, at the same time as these groups put pressure on governments to reform local tax systems, they establish a dialog with the entire population and increase people's engagement with the issue.
" The more information available, the greater the capacity to mobilize indignation against the perversity of societies with such a high concentration of wealth. Based on this data, civil society has also put pressure on governments with work and intervention agendas that point to the need to reform tax systems within countries and in the global coalition," said Viviana.
For an effective tax system
Gerbase points out that one of the challenges of taxing billionaires is combining it with taxing multinationals and their dividends since most of the wealth of billionaires derives from owning shares in these companies, for example. The researcher explains that in 2021, more than 130 jurisdictions agreed to a common minimum tax of 15% on large multinational companies under the Base Erosion and Profit Shifting (BEPS) initiative led by the G20 and the OECD, which began to be implemented this year.
"This advance demonstrates that it is also possible to implement a tax on the super-rich. The challenge is to continue to advance on the international agenda, perfecting the common minimum tax and implementing taxation and combining these efforts with national initiatives to close all the tax gaps that favor the richest," says Livi.
Lorenzo believes that the format of a global wealth tax still needs to be debated, as a tax that only captures billionaires may not benefit many developing countries, where there may be few billionaires. "The tools to tackle wealth inequality must be suitable for different contexts and help to reduce inequalities between countries. Even so, it is a significant advance to see a growing coalition of countries committed to this urgent issue," she says.
