Tax Justice Network ■ G20 blueprint adds to growing wealth tax momentum


G20 blueprint adds to growing wealth tax momentum

Proposals must now be taken forward in globally inclusive negotiations at the United Nations, says Tax Justice Network

The G20’s commissioned report, ‘A blueprint for a coordinated minimum tax on the ultra-high-net-worth individuals’, will shortly be published. The report, prepared by Prof Gabriel Zucman of the EU Tax Observatory for Brazil’s G20 presidency, adds important new momentum to the case for the adoption of wealth taxes.[1]

The proposal would create a minimum tax on around 3,000 billionaires (in US dollar terms), with the intention of ensuring that they pay at least 2% of their wealth in taxes annually. Prof Zucman estimates that this could raise an additional US$250 billion a year in revenues, primarily in the richest countries in the world where the great majority of billionaires reside.

If adopted, the proposal would remove any remaining concerns for national policymakers over introducing or enhancing their own wealth taxes – which are critical to addressing the within-country inequalities that research shows are responsible for significant damage to social outcomes.

In order to be effective, the G20 proposal would require much greater transparency of the ultimate beneficial ownership of financial and other high-value assets including property, companies and other legal vehicles. This would also represent a powerful step forward, empowering national governments to make their own wealth taxes much more effective – as well as many other taxes, including those on corporate profits and offshore income.

The G20 proposal follows from detailed work conducted by the UN tax committee, whose Subcommittee on Wealth and Solidarity Taxes is now preparing a model wealth tax law to support the introduction of national wealth taxes.[2] In addition, the ongoing negotiations at the Ad Hoc Committee to Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation, composed of all UN member states, has identified taxation of high net-worth individuals as a core element and is likely to include this in the terms of reference for the full negotiations to come.[3] Prof Jayati Ghosh and Prof Joseph Stiglitz, the co-chairs of the Independent Commission for the Reform of International Corporate Taxation (ICRICT, of which Prof Zucman is also a member) recently wrote to the UN tax committee chairs to request that their members “support the preparation of a UN Model Wealth Tax Law… as it can greatly accelerate and facilitate the adoption of wealth taxes around the world.”[4]

The G20 group of countries has in the past given the OECD – a club of fewer than 40 of the richest countries – the mandate to take forward work on corporate tax. The OECD’s current proposals are now four years behind schedule and countries have increasingly lost faith that they will deliver any significant benefits – even if they are widely adopted, which itself seems increasingly unlikely.[5] In addition, there are growing questions over whether the OECD is failing as an institution. Formal requests from a range of UN experts about potential human rights violations in the OECD’s work continue to go unanswered, and at the same time the organisation’s professional standards are under scrutiny with serious revelations having emerged about previous tax-related activities of both the Secretary-General and the head of tax.[6]

Alex Cobham, chief executive of Tax Justice Network, said:

“Wealth taxes are vital tools to curb the damaging, extreme inequalities our societies face, and to raise revenue to support wider social progress. We welcome the G20’s strong support for the principle of wealth taxation. The next step is to ensure that any blueprint taken forward contributes clearly to reduce both within-country inequalities and between-country inequalities.

“In light of the ongoing, slow-motion failure of the OECD’s work on corporate tax, its previous refusal to support work on wealth taxes, and the outstanding questions over its professional standards, it is clear that the OECD must not receive the G20 mandate to take forward any work on wealth taxes. Instead, the G20 should seek globally inclusive engagement and look to the established expertise within the United Nations.”


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Notes to editor

  1. The report will be published by the EU Tax Observatory.
  2. The UN tax committee (the Committee of Experts on International Cooperation in Tax Matters) is a committee of tax experts nominated by, but not formally representative of, UN member governments. They work to promote better tax policy measures, and have often advanced measures that ensure developing countries are also able to benefit. Our press release on the work of the Subcommittee for Wealth and Solidarity Taxes can be found here.
  3. The work of the Ad Hoc Committee to Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation is explained here. A detailed update on the progress of negotiations can be found here.
  4. The ICRICT co-chairs’ letter can be found here.
  5. More detail on the UN experts’ questions can be found here.
  6. The report, ‘Litany of failure: the OECD’s stewardship of international taxation’, published by Tax Justice Network in collaboration with the Center for Economic and Social Rights, Centro de Estudios Legales y Sociales (CELS), the Economic Policy Working Group at ESCR-Net, the Global Network of Movement Lawyers at Movement Law Lab, the Government Revenue and Development Estimations project (University of St Andrews/University of Leicester), Minority Rights Group, Tax Justice Network-Africa, and Steven Dean, Professor of Law, Boston University School of Law, can be found here.