G20 discusses Lula government’s proposal for global taxation of the rich

The Brazilian government, through the Ministry of Finance, begins discussing this Thursday (29) in the G20 Finance Track a proposal for global taxation on the “super-rich” presented on Wednesday (28) by the holder of the portfolio , Fernando Haddad. This week, the event brings together ministers and presidents of central banks from the 20 largest economies on the planet in the city of São Paulo.

Speaking at the G20 summit this morning, Haddad stated that “the world’s billionaires continue to evade our tax systems through a range of strategies.”

“The EU Tax Observatory’s latest report on tax evasion demonstrated that billionaires pay an effective tax rate equivalent to between 0 and 0.5% of their wealth. Colleagues, I honestly wonder how we, G20 Finance Ministers, allow that a situation like this continues”, said the minister.

“For this reason, I invited Professor Gabriel Zucman, one of the greatest experts on the subject in the world, to present us with a proposal for taxation of the super-rich. I know there are different views on the subject in the room, but I hope the presentation is informative and pave the way for future evidence-based discussions”, he continued.

Government wants to “end privileges and correct distortions”, says Finance Secretary

“The proposal that we have been working on in Brazil, which is to end privileges and correct some distortions in legislation, we are taking to the global level”, explained the executive secretary of Finance, Dario Durigan, upon leaving the meeting on Wednesday.

According to him, the idea taken to the international forum would be complementary to the debate on global taxation taking place within the scope of the Organization for Economic Cooperation and Development (OECD).

The entity works on two possibilities in this context: the distribution of taxation rights on multinational profits between countries and a global minimum taxation for large companies, such as big techs.

“We know that the OECD touches on two pillars of discussion about global taxation: one that involves big tech companies and the other that involves corporations, companies. It is possible to think of a third pillar, with complex governance – which will require who will release this, at what moment, over time – that looks at income, capital gains, inheritance”, he explained.

Also according to the secretary, the suggestion brought to the meeting does not include a percentage to be charged. “There is still no proposal for an effective rate. The dynamics of international forums require more time, so it is necessary to galvanize support for the idea, the concept, and from there carry out impact studies to see what is possible to be accepted politically by the various countries”, he explained.

The proceeds, according to Durigan, would be used for global actions. “The world will experience this need. He lived through the pandemic, he may live through others. We have seen that climate change will impose reaction and response mechanisms on us, and the world needs to coordinate. One of the mechanisms that arises from a consensus: the world will need to finance itself in more ways, in different ways”, she stated.

For him, a contrary reaction is expected from some representatives. In bilateral negotiations organized until now apart from the expanded forum, however, there would already be adhesion from a group of economies, such as “European countries”.

“The G20 is a complex forum, we have different perspectives, countries with different interests. We know this, but we cannot avoid proposing an instrument.”

In a conversation with journalists, French minister Bruno Le Maire defended the proposal for global taxation of the “super-rich” as a way to prevent tax evasion.

“We are fully committed to accelerating the process to implement at the international level at the OECD level, at the G20 level, and I hope we also have all European countries, a minimum taxation on individuals to combat any type of tax optimization around the world” , he said.

In an interview with the newspaper “Folha de S.Paulo”, Norwegian Finance Minister, Trygve Veduym, praised the Brazilian proposal. “For us, as a country that has a wealth tax, of course we support the political objective of your government,” he said.

He recalled that when taxation on large fortunes was implemented, there was a flight of capital from the country. “In Norway, some billionaires left. Many people went to Switzerland, it’s true. That is the main reason also to work for this global taxation,” he argued. “With global taxation, it would be less attractive to move because of the wealth tax.”