For the first time, finance leaders from every G20 country have agreed to tax the world’s billionaires.
Treasury ministers and central bankers from the group of 20 major economies agreed to reference fair taxation of “ultra-high-net-worth individuals” in joint statements after meetings in Brazil.
But an agreement to team up on taxing the world’s richest families papered over disagreements about how to do it, raising fears about how viable the plan is.
Even so, campaigners at Oxfam International hailed the agreement as a significant step forward.
Its tax policy lead Susana Ruiz said: “This is serious global progress – for the first time in history, the world’s largest economies have agreed to cooperate to tax the ultra-rich.
She added: “Governments have for too long been complicit in helping the ultra-rich pay little or zero tax. Massive fortunes afford the world’s ultra-rich outsized influence and power, which they wield to shield, stash and supersize their wealth, undercutting democracy and widening inequality.”
Billionaires currently pay the equivalent of 0.3% of their wealth in taxes, according to a report by Gabriel Zucman, commissioned by Brazil, host of this year’s G20 meetings, culminating in the leaders’ summit in November.
The report said a 2% tax could raise $250bn (£200bn) per year globally from about 3,000 individuals: cash that could fund public services like education, healthcare and the fight against climate change.
Brazil’s finance minister Fernando Haddad said the world has a problem of “progressive taxation on the poor and not on the rich”.
He added: “The poorer you are, the more tax you pay. This is almost a rule.”
Global warming is caused mostly by the burning of fossil fuels by rich countries like the UK, EU and US, but its impacts are disproportionately hitting developing nations like Burundi, Somalia and Mozambique.
Campaigners say billionaires’ polluting lifestyles of private jets and superyachts contribute an outsized proportion to the climate crisis.
Campaigners handed in petitions with over 1.5 million signatures calling on G20 leaders to tax the ultra-rich to Mr Haddad. Pic: Oxfam International
Brazil, which is spearheading the proposed tax, has put tackling poverty and climate change at the heart of its presidency of this year’s G20 meetings, and of its hosting of the annual United Nations climate summit, COP30, in 2025.
The Amazon nation and giant of the developing world is itself battling the causes and impacts of climate change like deforestation and drought.
But the proposal has created a rift among the group of 20 large economies.
France, Spain and South Africa have expressed support, while the US is resisting it.
How would a billionaire tax work?
All agreed in a joint communique on Friday to “engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed”.
But another row is rumbling over who would oversee the process.
The US backs the OECD (Organisation for Economic Co-operation and Development) as host, but campaigners say that the club of mostly rich countries could not be trusted for the task. Instead, they want the broader and more inclusive United Nations to manage it.
US Treasury Secretary Janet Yellen said: “We don’t want to see this shifted to the UN.”
She added the OECD is “consensus-based organisation. We’ve made a huge amount of progress, and the UN doesn’t have the technical expertise to do this”.
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Supporters say it needs to be imposed internationally, otherwise the super-rich would just move their wealth from one country to the next, but implementing it would be extremely complicated.
To get the fund off the ground, G20 leaders would have to throw their support behind concrete coordination and standards when they meet at their annual summit in November.
Some observers remained sceptical about the chances for a global “billionaire tax” targeting the world’s largest fortunes.
Not even the 27-nation European Union can tax as a bloc, and its members are divided on the proposal, though some countries are reluctant to criticise it publicly.
A UK government spokesperson said: “The UK adopts a progressive tax system, which is an essential foundation for economic growth, helping raise funds to support vital public services in a way that is fair.
“The UK continues to play a leading role in addressing 21st century global tax challenges, such as through the two pillar global tax agreement and improving the exchange of information between jurisdictions.”