The European Commission’s endorsement of the G20 proposal to create a global 2% tax for large fortunes with assets exceeding US$1 billion has generated a heated debate in the European Parliament. The measure was praised this Wednesday by the vice president of the European Commission, Margaritis Schinas, during his speech in the chamber.
Schimas said Brussels “warmly welcomes” the proposal and called on the OECD, who is currently leading talks on the minimum tax on multinationals, to consider working on this other issue.
“All taxpayers, especially those who have the most, must pay their fair share,” said the vice president of the community Executive. Schimas stressed that “it is clear that many countries have already taken measures to tax the super-rich, but let’s be clear: capital can easily cross borders.”
The words generated division among MEPs. The social democrats (S&D), liberals (Renew), Greens and Left groups support the initiative. Liberal MEP Stéphanie Yon-Courtin called for “changing the rules of the game” with large fortunes as was already done with multinationals.
For his part, the popular MEP Fernando Navarrete defined it as a “fallacy” that taxing the assets of the rich will contribute to reducing poverty. “Quite the contrary, such policies tend to harm the middle classes, instead of helping those who really need it,” he noted.
This measure is based on a report, commissioned by Brazil for its current G20 presidency, in which it proposes a global tax of 2% for fortunes with assets greater than US$1 billion. The document, which Expansión reported last July, points out that billionaires currently pay the equivalent of 0.3% of their wealth in taxes. He claims that a 2% tax would raise between US$200,000 and US$250,000 million a year.
According to the report, this new figure would follow part of the design of the global minimum corporate tax. In this way, would apply to billionaires who no longer pay the equivalent of 2% of their wealth in income taxes. Although the report is very preliminary, the new member of the G-20, The African Union has expressed interest in the proposal, as have Belgium, Colombia, France and Spain, according to the author of the document commissioned by Brazil. Now the endorsement of the European Commission has been added through Schimas.
For the Brazilian Government, this issue is a priority within the presidency of the international organization. “A global minimum tax on billionaires is a way to raise funds to advance agendas of reducing hunger, promoting sustainable development and global governance reforms,” said Felipe Antunes de Oliveira, general coordinator of International Affairs of the Brazilian Ministry of Finance, during the presentation of the report. However, he acknowledged that it is difficult to implement. “We can expect the negotiations to be long,” he added.
This is not the first time that the possibility of a global tax on large fortunes appears in major international tax policy forums. There are more and more voices suggesting it.
The EU Fiscal Observatory – an independent think tank of the Paris School of Economics, the same one for which the economist who prepared this document works – He had already launched this same proposal in October of last year.
