These three European countries are backing a billionaire wealth tax

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Campaigners say the tax will cover around half of annual loss and damage costs from climate disasters.

Leaders from Germany and Spain are calling for a global tax on billionaires to help tackle the costs of the climate crisis.

Brazil, which chairs the G20 group of the world’s largest economies, first proposed a tax on the super-rich at a meeting of finance ministers in February.

Now, finance chiefs from Germany, Spain and South Africa have joined Brazil in fleshing out the proposal which could see the world’s 3,000 billionaires made to pay a minimum 2 per cent levy on their wealth.

“It is time that the international community gets serious about tackling inequality and financing global public goods,” they write in a new comment piece for UK newspaper The Guardian today.

Spain’s first vice president and minister of finance, María Jesús Montero, and minister of economy, trade and business, Carlos Cuerpo, authored the article alongside Germany’s Svenja Schulze, minister for economic cooperation and development.

Brazil and South Africa’s finance ministers, Fernanda Haddad and Enoch Godongwana, are the other co-signatories. While France’s finance minister, Bruno Le Maire, also previously gave his backing to a world wealth tax.

How could a billionaire tax work?

“One of the key instruments that governments have for promoting more equality is tax policy,” the ministers write.

“Not only does it have the potential to increase the fiscal space governments have to invest in social protection, education and climate protection. Designed in a progressive way, it also ensures that everyone in society contributes to the common good in line with their ability to pay.”

Billionaires are skilled at shirking their fair share of tax, hoarding their money in tax havens, holding companies, offshore trusts and other intermediate structures.

This has enabled them to pay a much lower rate of tax as a proportion of their income than the rest of the population; just 0-0.5 per cent according to the EU Tax Observatory research lab.

“Of course, the argument that billionaires can easily shift their fortunes to low-tax jurisdictions and thus avoid the levy is a strong one,” the finance ministers explain. “And this is why such a tax reform belongs on the agenda of the G20. International cooperation and global agreements are key to making such tax effective.”

Having an effective wealth levy is a “necessary third pillar”, they say, alongside negotiations on digital economy taxation, and the new minimum corporate tax of 15 per cent for multinational companies.

How far would the billionaire tax cover climate costs?

The finance ministers say that a 2 per cent minimum wealth tax could, according to estimates, unlock an additional $250 billion (€233 bn) in annual tax revenues globally.

An appealing part of the plan is that this extra money could be applied to some of the world’s greatest public needs and injustices, including climate change. They say that €233 billion is roughly the amount of economic damages caused by extreme weather events last year.

Zahra Hdidou, senior climate and resilience adviser at international charity ActionAid, is in full agreement with a wealth tax.

“It’s necessary that we have to start taxing billionaires,” she tells Euronews Green. “Not just billionaires, we need to start taxing the biggest polluters, the fossil fuel industry as well, who are the biggest causes of climate change.”

But she points out that a billionaire tax alone won’t cover the roughly $400 billion (€373bn) a year in climate loss and damage costs.

“This 2 per cent wealth tax is great,” she adds, “it will cover about half of what’s needed. So that’s a good start, but we need to do more in taxing the biggest polluters.”

How likely is a global billionaire tax agreement?

Of course, the world is still a long way from shaking hands on an international wealth tax.

French economist Gabriel Zucman is now putting together the technical details of a plan that will be discussed by the G20 in June, The Guardian reports.

“I don’t want to be naive. I know the super-rich will fight,” he said. “They have a hatred of taxes on wealth. They will lobby governments. They will use the media they own.”

Even so, the economist says there is overwhelming public support for this proposal. In Europe for example, it comes amid discussions of how the climate goals in the European Green Deal could be financed.

In February, France’s Le Marie told news agency Reuters that, “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 US has not backed the global wealth tax, despite Biden suggesting a billionaire tax last year. But Brazil is reportedly encouraged that America hasn’t opposed it either.

The finance ministers are urging more countries to join their campaign for a fairer tax system.