Jaipur, India | 31 July 2023
Economic inequality has reached alarming levels, and the COVID-19 pandemic and financial crises, including debt crisis, have worsened the situation. Besides, global wealth inequality has become more pronounced than income inequality. It’s inhumane that the richest 10% own a staggering 76% of all wealth while the poorest half barely holds 2%. To fight this growing gap, we – The PRAKARSA, South Asia Alliance for Poverty Eradication (SAAPE), LDC Watch, and Tax and Fiscal Justice Asia (TAFJA) – as part of a larger civil society organizations from the Global South – firmly advocate for a ‘Wealth Tax’.
At the C20 Summit in Jaipur, on 30 July 2023, we organized a side-event titled “Making Finance Work for
People: A ‘Wealth Tax’ to Address Growing Inequality”. Our message was clear: a progressive net wealth tax can provide crucial domestic resources for post-COVID and debt crisis recovery. It’s unfair that the burden of taxation falls heavily on the poor, pushing them further into misery. We appreciate that the Special Committee of Financial Issues of the Civil 20 India intensively discussed the wealth tax as one of the most direct instruments to establish fair taxation for improving social contracts. It is also reflected in the Civil20 India 2023 Policy Pack which recognizes the problem of economic inequality:
At the domestic level, the excessive concentration of wealth in the hands of a
few individuals or households can lead to negative consequences for social and
economic well-being.
Proposing a solution, the Civil20 India 2023 Policy Pack writes:
The G20 must promote the creation of a wealth tax by, as an example, implementing it domestically in their countries, to create a more equitable distribution of wealth and to raise state revenue for public services and infrastructure, which are critical for social and economic development.
While the inclusion of wealth tax in the C20 India 2023 Policy Pack is a positive step in putting pressure on the G20 economies to implement wealth taxes, we strongly urge G20 governments to enact and operationalize the wealth tax policy. We believe implementing direct taxes on income and wealth while exempting essential items and small traders from consumption taxes can help create a fairer tax system.
We call on the G20 leaders to introduce permanent net wealth taxes with progressive rates, whilst providing reasonable thresholds below which wealth taxes do not apply to keep them focussed on the wealthy. The additional tax revenue must be invested in public services that reduce inequality, like education, healthcare, and social protection, ensuring they are universal, of high quality and free at the point of use, along with their investment in other employment-generating productive sectors. Additionally, to achieve tax justice and address gender disparities, we urge G20 leaders to prioritize boosting investment in care infrastructure to redistribute care work as a ‘whole of society’ responsibility and alleviate women’s disproportionate share of care work.
The G20 countries must support reforms in international tax architecture to make it more democratic and responsive to the needs of the people and the planet. Following the approval of the United Nations General Assembly Resolution 77/244, the negotiations for international taxation cooperation, including that of wealth tax, should be held under the United Nations, ultimately leading to the formation of a UN Tax Convention and a separate tax body under the auspices of the UN.
Inequality is not inevitable. Inequality is a political choice. Act now – implement progressive wealth taxation!
