The G20 group of the world’s most powerful countries is exploring plans for a global minimum tax on the world’s 3,000 billionaires, aiming to end a “race to the bottom” that has enabled the super-rich to pay less than the rest of the population.
Leaders gathering in São Paulo for a key G20 meeting of finance ministers and central bank governors are preparing to discuss an internationally agreed backstop on the taxation of hypermobile wealthy individuals, amid increasing global cooperation to tackle tax avoidance.
Aiming to build on the cooperation that resulted in a 15% global minimum tax on multinational companies, which came into effect in January, the plan is being promoted under Brazil’s presidency of the G20 before a summit of world leaders in Rio de Janeiro in autumn.
Brazil’s finance minister, Fernando Haddad, under the leftwing government of the president, Luiz Inácio Lula da Silva, is pushing for the adoption of the policy. France’s finance minister, Bruno Le Maire, also gave his backing this week, saying Europe should take it forward.
“Currently the richest people can avoid paying the same level of tax as other people who are less rich. We want to avoid such tax optimisation,” Le Maire told Reuters news agency before the meeting.
“We want Europe to take this idea of minimum taxation of individuals forward as quickly as possible, and France will be at the forefront.”
The economist Gabriel Zucman has been invited by the Brazilian government to kickstart the G20 talks on Thursday.
The EU Tax Observatory, a Paris-based thinktank led by Zucman, set out a mechanism for a global wealth tax in a report last year. It called for a 2% annual levy on the wealth of the world’s richest individuals as the starting point for a global minimum tax.
It estimates the measure could raise $250bn (£197bn) a year from the 2,756 known billionaires, who together are believed to be worth $13tn. The idea is based on the 2021 agreement between 140 countries to impose a global minimum tax rate of 15% on the biggest multinational companies.
Zucman said the G20 talks would mark “the beginning of a conversation”. Various details would need to be hammered out between countries over how the wealth tax would function, in a process that could take years.
The global minimum corporate tax took a decade to be introduced, with relatively limited movement until the election of the US president, Joe Biden, who championed the policy.