The super-rich may face future tax rises.
Credit: Felix Fuchs. Unsplash.
The campaign group Tax Justice Network has claimed that governments that copy Spain’s wealth tax on the super-rich could raise more than $2 trillion (1.5 pounds) to finance the climate transition.
An increasing number of countries are considering raising taxes on the super rich, according to a report published by the Tax Justice Network. The group claims that copying a “featherlight” tax on the 0.5% richest households in Spain could help raise trillions of extra dollars around the world each year.
The Spanish government introduced a “solidarity” wealth tax at the end of 2022, to be collected in the 2023 and 2024 tax years on the net wealth of individuals exceeding €3m (£2.6m). This tax is only one part of the proposed tax changes for 2024 that taxpayers in Spain should be aware of.
The Tax Justice Network found that introducing a similar tax on the top 0.5% wealthiest households in the world at a rate of between 1.7% and 3.5% would raise up to $2.1tn. The same study predicted that up to $31bn a year could be raised from the UK alone.
Global Minimum Tax Could Become Reality
The study comes in conjunction with plans for a global minimum tax on the world’s 3,000 billion. The Global Minimum Tax proposal, advocated by Brazilian president Luiz Inácio Lula da Silva, has so far gained support from France, Germany, Spain, and South Africa. However, reaching a global agreement will probably take years and will likely face stiff opposition in various countries.
Alison Schultz, a research fellow at the Tax Justice Network, said: “A minority of rich countries still seem to be holding back from support for a robust framework convention on tax – despite this being the best opportunity that we’ve ever had, and one that their own people demand they act on with urgency.
“This needs to change now – the climate can’t wait, and nor can the people of the world.”
Evidence Suggests Tax Reform Doesn’t Lead to an Exodus
Despite warnings that tax reform will lead the ultra-wealthy to move them – and their wealth – elsewhere, the Tax Justice Network notes that reforms implemented in some nations haven’t resulted in an exodus of the super rich.
For example, it’s estimated that as few as 0.01% of the wealthiest households moved away following tax reforms in Sweden, Norway, and Denmark. Similarly, a study by the University of Warwick estimated that changes to the “non dom” rules only led to a migration rate of 0.02%.
