(July 26): Group of 20 (G20) finance chiefs are set to leave Brazil’s controversial plan for a global billionaires tax to future summits, pledging in a draft communique to continue discussions after debating the idea this week in Rio de Janeiro.
The draft communique, which was obtained by Bloomberg News, includes a pledge to continue “dialogue on fair and progressive taxation, including of ultra high net worth individuals,” a reference to the 2% minimum tax on billionaires that Brazil President Luiz Inacio Lula da Silva has made the centerpiece of his nation’s year atop the group.
Brazil pushed for the addition of the language in an updated draft after an initial version lacked any specific reference to the idea, saying only that the countries would work toward a “fairer, more stable and efficient international tax system fit for the 21st century.”
The idea has split the G20 and the G7 since it was initially unveiled in February, winning support from nations like France and South Africa while the US and others rejected it. Amid those disagreements, the finance ministers entered this week’s gathering in Rio poised to call for studies on taxation and inequality that could take years to complete, as Bloomberg News reported Wednesday.
The final wording of the communique is subject to ongoing debates.
Lula has pushed the levy as a potential way to help pay for global fights against climate change and hunger. The US and other nations, however, have continued to express doubts about its feasibility.
“Tax policy is very difficult to coordinate globally, and we don’t see the need or really think it’s desirable to try to negotiate a global agreement on that,” US Treasury Secretary Janet Yellen told reporters in Rio on Thursday.
Despite the pushback, Brazil Finance Minister Fernando Haddad hailed the pledge for future dialogue, telling reporters on Thursday that the final communique would be “historic” for mentioning taxation of the super-rich. Brazil’s G-20 would be remembered as a new starting point for discussions on tax fairness as a result, he said.
The group is also set to issue a separate statement on international tax policy cooperation, Tatiana Rosito, the secretary for international affairs at Brazil’s Finance Ministry, said during a Thursday news conference. That will include language saying that the G20 will “seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed”, according to a person with knowledge of the matter.
The calls for further studies on how governments can increase transparency and fairness in the taxation of individuals will be included in that statement, according to multiple people familiar with the discussions. That task will be carried out by the architects of a global minimum levy on corporations, a G20 plan that’s made some progress in recent years.
The draft communique also acknowledges the need for more debt transparency between developing nations and their wealthier creditors.
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