A Call for Climate and Social Justice: Why Europe Needs a Wealth Tax

According to the Eurobarometer survey on fairness and inequality, 81% of the population in the Member States of the European Union believe that income differences are too great in their country, and 78% think their government should do more to address these income inequalities. Two-thirds believe that taxation has a role to play in remedying this situation.

The reason is clear: most of the tax systems in place in Europe deliberately favour the wealthiest, to the extent that this favouritism has become an unspoken norm. In virtually all European countries, taxation of the richest individuals has fallen steadily over time. Over the last thirty years, wealth tax has been abolished in all EU countries except Spain, where some form of federal tax on the richest remains. It is high time to reverse this trend, not only for democratic reasons, but also for economic efficiency.

At the same time as these inequalities are increasing, the European Union is facing another major challenge: climate change. As the European Climate Risk Assessment points out, Europe is the fastest-warming continent, with temperatures rising around twice as fast as the global average. Extreme weather events, such as floods, storms and forest fires, are becoming more frequent and disproportionately affect the most vulnerable populations, who paradoxically emit the least greenhouse gases. Experts also indicate that this situation is set to worsen over the coming decades.

A fundamental reorientation of the European Union towards a fair and democratic climate transition is therefore imperative and urgent. As climate justice cannot be achieved without social justice, we are calling for the introduction of a tax on the ultra-rich to restore global balance, while funding social policies, the ecological transition and development cooperation.

Learning from History: Taxing Wealth in Times of Crisis

In the past, wealth has been taxed in situations deemed exceptional. This was the case during the two world wars: in France in 1916 and 1945, and in the United States in 1941, when President Roosevelt introduced a tax on the highest incomes.

While past crises have led to a rethink of prevailing economic thinking, more recent crises have done little to shake up the current economic model. The great speeches made during the 2008 financial crisis or the coronavirus pandemic, for example, have had no effect on the neoliberal model, which seems unshakeable, even unsinkable. Yet the times in which we live today, with their growing social injustices, widening inequalities and various disruptions, require leaders to have the courage to change paradigms. The social and climate emergency must take precedence!

This paradigm shift must take place at least at European level. Individually, the Member States will not have the capacity, even if they move forward in a concerted manner, to counter the mechanisms of tax competition and dumping that discourage any effort towards greater justice. Europe was created precisely to provide global solutions to these pitfalls.

Unlocking Funds for Social and Ecological Progress

At the same time, implementing the ecological transition will require tremendous financial efforts. According to a study by the European Commission, Europe’s transition to a sustainable economy and meeting its climate targets by 2030 will require substantial investment, estimated at an additional €260 billion per year.

A wealth tax would raise this money, as several studies have revealed. The latest, published by Oxfam in April 2024, shows that EU governments are missing out on more than €286 billion in revenue a year because they are not taxing the richest Europeans proportionately. This huge amount, comparable to Finland’s GDP, is equivalent to around €33 million in uncollected tax revenue every hour.

A wealth tax would therefore be a very useful tool if we want to invest massively in the social and ecological transition and if we want to avoid average and poor households paying for this transition. This tax is not only necessary but also fair to share the burden of the green transition, especially as the richest people in the world contribute disproportionately to CO2 emissions. It is not just a matter of economic efficiency, but also of fiscal justice and democracy.

Take Action: One Million Signatures to Transform Europe

In 2023, a European Citizens’ Initiative (ECI) calling for a wealth tax was launched. This procedure is a concrete tool for action that is still little known in the European Union. If successful, it can be used to ask the European Commission to draw up a legislative proposal in response to the request. In this case, the aim is to introduce a European wealth tax to finance the fight against climate change and inequality. It would contribute to the EU’s own resources by generating revenue to co-finance the ecological and social transition policies pursued by the Union and its Member States.

For this initiative to succeed, we now need to collect one million signatures across the whole of Europe by 9 October, while reaching the minimum threshold in at least seven Member States. One million signatures may sound like a lot, but it’s not much if we mobilise the public, all those who are calling for greater social justice and resources for the ecological and social transition. That’s why we’re counting on a coalition of politicians, trade unions, NGOs and members of civil society who, together, can turn this initiative into a major popular and civic victory.

Let’s seize this opportunity to demand greater social and fiscal justice throughout the European Union!