G20’s 'billionaire tax' plan: World’s top economies set to act on ultra-rich

G20 Billionaire Tax: The G20, the group of the world's 20 largest economies, agreed to collaborate on ensuring effective taxation of the ultra-rich, on Thursday.  

The declaration, set to be published on Friday, was a top priority for Brazil, which is chairing the G20 talks this year. Brazilian President Luiz Inacio Lula da Silva, a former factory worker, has been advocating for the inclusion of the "billionaire tax" on the G20 agenda.

"With full respect to tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed," stated the G20 tax declaration, as seen by Reuters.

"Cooperation could involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices," the declaration added.

Brazil's wealth tax proposal

Brazil has proposed a 2 per cent wealth tax on fortunes over $1 billion, which could generate up to $250 billion annually from approximately 3,000 individuals.

"What started today is a broader process that will require the participation of academia, scholars, and international organisations with experience and time, such as the OECD and the UN," Brazilian Finance Minister Fernando Haddad told reporters.

While the proposal has garnered support from other G20 members, its implementation is expected to be challenging.

"We all know that we are starting a process which is very, very challenging," European Economic Commissioner Paolo Gentiloni remarked on the sidelines of the G20 meeting. "The first step will be to work on exchange of information amongst different countries. It will be something to discuss in the coming months and years."

US Treasury Secretary Janet Yellen also praised the spirit of the discussions but expressed caution regarding a new global tax policy. She noted that US President Joe Biden had proposed several similar policies, including a "billionaires tax."

"We think ... it makes sense for most countries to take this approach of progressive taxation. And we are happy to work with Brazil on that and propagate these ideas in the G20," Yellen stated at the G20 meeting. 

"But tax policy is very difficult to coordinate globally and we don't see a need or really think it is desirable to try to negotiate a global agreement on that. We think that all countries should make sure that their taxation systems are fair and progressive," Yellen added.

Taxing the world's richest

The "billionaire tax" would target the world's wealthiest individuals, such as Tesla and SpaceX owner Elon Musk, with a fortune estimated at around $235 billion, Amazon owner Jeff Bezos with approximately $200 billion, and French luxury goods tycoon Bernard Arnault with about $180 billion.

According to charity Oxfam, the richest 1 per cent have accumulated $42 trillion in new wealth over the past decade, nearly 34 times more than the bottom 50 per cent of the world’s population, exacerbating wealth inequality.

Oxfam highlighted that the average wealth per person in the top 1 per cent rose by nearly $400,000 in real terms over the last decade, compared to just $335, an equivalent increase of less than nine cents a day for a person in the bottom half.