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Business News/ News / Taxing the Super-Rich Is Brazil’s G-20 Plan for Climate, Hunger
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Taxing the Super-Rich Is Brazil’s G-20 Plan for Climate, Hunger

Brazil believes it has found a way to pay for the fight against climate change and world hunger: Tax the super-rich.

Taxing the Super-Rich Is Brazil’s G-20 Plan for Climate, HungerPremium
Taxing the Super-Rich Is Brazil’s G-20 Plan for Climate, Hunger

(Bloomberg) -- Brazil believes it has found a way to pay for the fight against climate change and world hunger: Tax the super-rich.

As president of this year’s Group of 20 nations, Brazil has made implementing a global minimum wealth tax on billionaires its cause celebre. It’s touting the levy as a means to fund efforts to combat rising temperatures and poverty in low- and middle-income countries — and is attempting to drum up support for the idea, long popular in progressive circles, on the world stage.

“You can use these resources to start decarbonization in the poorest countries, which would increase investments in these places with humanitarian benefits," Brazil’s Finance Minister Fernando Haddad said Thursday in an interview on the sidelines of the Spring meetings of the International Monetary Fund and World Bank in Washington.

As scientists warn about the increasing dangers of a warmer world, President Luiz Inacio Lula da Silva has made tackling climate change and inequality central themes of Brazil’s G-20 leadership. 

Read more: Nobel Economist Tells G-20 to Slap Climate Tax on Billionaires

Brazil in February invited French economist Gabriel Zucman to pitch G-20 finance ministers on his plan to slap a 2% minimum tax on the world’s billionaires — a group of about 3,000 people - and the suggestion has struck a chord.

France and Spain have backed the idea of working on a tax and on Wednesday, IMF Chief Kristalina Georgieva said that “closing tax loopholes, ensuring that everyone pays their fair share" can help muster more resources for inclusive growth.

Now, Brazil is trying to build consensus among fellow G-20 members to analyze a wealth tax on the ultra-rich, and agree to work toward the finalized proposal over the next three years. Haddad says he hopes to have a political statement from the group as soon as July, when finance ministers will meet in Rio de Janeiro.

The EU Tax Observatory, a think tank in Paris run by Zucman, estimates that the proposed tax could raise some $250 billion per year worldwide. Haddad suggested the proceeds could be funneled into a development fund for poor nations to help them meet the huge costs of greening their economies.

“How can these countries be expected to invest in decarbonization?" he said. “It’s a very precarious situation."

Polls show that redistributing money from the world’s wealthiest could prove a popular measure in the US and Europe, although “tax the rich" has often proved easier to deploy as a slogan than hard policy.

To help sell the idea, Brazil has tapped prominent Nobel laureate economists Esther Duflo and Joseph Stiglitz.

Haddad recognized his pitch won’t be easy, but saw grounds for optimism following the success of the Organization for Economic Cooperation and Development’s minimum tax on multinational corporations, which went into effect in January.

“It began with incredulouness and skepticism," Haddad said.  But they start “gaining momentum until it becomes something that is not only doable, but something that countries feel pressured to adhere to."

--With assistance from Bruna Lessa.

More stories like this are available on bloomberg.com

©2024 Bloomberg L.P.

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Published: 19 Apr 2024, 12:16 AM IST
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