When G20 finance ministers gather in Rio de Janeiro this week, Brazil and France have a chance to put these powerful countries on track to deliver a global wealth tax that could raise over $680 billion per year in the fight to tackle poverty and the climate crisis. Both countries have been vocal supporters of taxing the super-rich to fund international development and climate action.  

In April, finance ministers Fernando Haddad (Brazil) and Bruno Le Maire (France) announced their intent to tax the wealth of billionaires by at least two percent annually, prompting ministers from Germany, South Africa and Spain to back the proposal. As the current host of the G20, Brazil commissioned an investigation into the feasibility of this global wealth tax – and the results were published by French economist Gabriel Zucman in June, generating further momentum in efforts to fill the funding gap for climate and development.  

Zucman’s findings show that a global wealth tax on the super-rich – billionaires and people with assets worth more than $100 million – could be enforced successfully even if all countries did not adopt it. It is also a popular measure: more than two-thirds of people across seventeen G20 countries show support for making the super-rich pay higher taxes as a means of funding major improvements to our economy and lifestyles.  

This isn’t surprising. Ensuring that billionaires are properly taxed could deliver significant, tangible benefits in people’s lives and go some way to addressing the systemic injustices and inequality reflected by the climate crisis and poverty. 

The world needs a new global deal on climate and development finance

An ambitious global wealth tax, together with higher and permanent tax on oil corporations and extraction, would provide hundreds of billions of dollars/euros each year to properly fund scaling up renewable energy, rolling out heat pumps and insulation programmes to lower the cost of heating or cooling our homes, new public transport links, future-proof jobs and much more – helping communities to thrive.  

It would also end more than a decade of broken promises by G20 states, ensuring that some of the world’s wealthiest countries have enough money in their national coffers to provide adequate finance to pay for those suffering the consequences of climate impacts now. Helping the poorest communities prepare for unnatural disasters like increased wildfires, flooding and sea level rise, and ensuring people can rebuild their homes, infrastructure and places of work when preventative measures are not an option. 

Power to communities

A global wealth tax is a moral imperative. By implementing a fairer system of taxation, the G20 could accelerate a just transition to a low-carbon economy, cutting dangerous carbon emissions and boosting living standards and energy access at great scale, while also tackling deep-rooted injustice. Delivering finance for community-oriented renewable energy projects across Latin America, Africa, Asia and the Pacific would put power back in the hands of communities that continue to suffer from the violent legacy of colonialism and extractive profiteering. 

For this to be achieved France, and other wealthy nations in the G20 like Germany and the UK, must be willing to make concessions and assume historical responsibility for exploiting fossil fuel extraction in the economically poorer countries whose citizens are experiencing the worst consequences of the climate crisis. The emerging French government must deliver concrete plans to redirect its fortune and tax its billionaires towards a renewable energy-powered planet. 

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It is incumbent on both Brazil and France to seize the opportunity presented by growing support to deliver a global wealth tax at the meeting of powerful finance ministers this week. Both countries must do everything they can to build trust and political will around the crucial proposal. But this will be a challenge if they undermine their stance on the international stage with contrasting domestic policy, something both governments are guilty of. 

Brazil has been pushing for new oil projects, including in the Amazon and is gearing up to become the fourth-largest oil producer in the world. France, despite being fined by the European Commission, is still not on track to meet its domestic renewable energy targets and announced in February a two billion-euro cut to the budget allocated for environmental and energy transition programmes. It is high time for both countries to stop the smoke and mirrors approach to international diplomacy, by aligning their commitments at national and international levels. 

Leaders’ summit

This week, ministers Haddad and Le Maire have a responsibility to rally their G20 counterparts around the wealth tax proposal and send a strong and unified signal to heads of state and governments to take concrete action that delivers a global wealth tax on billionaires when they meet in November. 

The stakes are high. The vast scale of global inequality means that nearly one in eleven people around the world live below the poverty line according the World Bank. In addition, this is set to be yet another record-breaking year for climate impacts, in a critical decade to prevent global heating from tipping over the 1.5°C threshold – a limit beyond which the ability of impacted communities to survive and thrive will be put at intolerable risk. We need to see vast quantities of finance mobilised to scale up renewable energy at the speed needed, and billionaires and multi-millionaires need to be forced to pay up.  

We’re all rooting for this one to work – it can take us a long way.

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The finance ministers of Brazil and France pushed this week for a tax on US-dollar billionaires of at least 2% of their wealth each year, with the $250 billion it could raise going to tackle poverty, hunger and climate change.

Brazil’s Fernando Haddad and France’s Bruno Le Maire promoted their proposal at the Spring Meetings of the World Bank and International Monetary Fund (IMF) in Washington, alongside IMF head Kristalina Georgieva and Kenyan finance minister Njuguna Ndung’u.

“In a world where economic activities are increasingly transnational, we have to find new and creative ways to tax these activities [and] thus direct the revenues to common global endeavours such as ending hunger and poverty and fighting climate change,” said Haddad.

He called on world leaders to show “political courage”, embrace “innovative solutions based on evidence” and give their people “hope”. “Without courage, there’s no good politics that can be done,” he said.

Speaking next at a briefing in Washington, Le Maire said overhauling the taxation system was “a matter of efficiency and a matter of justice”, and that a levy on the super-rich should follow already-agreed measures for a digital tax and global minimum corporation tax. “Everybody has to pay his fair share of taxation,” he added.

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French economist Gabriel Zucman is drawing up a proposal for a billionaires tax that will be presented to G20 finance ministers and central bankers when they meet in the Brazilian city of Rio De Janeiro in July.

Haddad, whose government will host that meeting as G20 chair, said he wanted the Group of 20 big economies to issue a statement of support. Le Maire said he hoped the wealth tax would be in place by 2027, ten years after reform of the international taxation system began.

But at a separate press conference in Washington this week, Germany’s finance minister Christian Lindner rejected the proposal. “We do not think it is suitable,” he said. “We have an appropriate taxation of income.” Lindner is from the free-market Free Democratic Party, part of Germany’s governing coalition with the centre-left and Greens.

Who will spend it?

Zucman said not all countries needed to agree to a measure for it to be implemented. If some countries don’t tax billionaires, others can tax them more to make up for it, he said, adding that is how the global minimum corporation tax rate of 15% – which went into effect this year – works.

While Haddad spoke of tackling hunger and climate change, it is not yet clear who would be in charge of spending the money raised from billionaires or what it would be spent on.

Esther Duflo in 2009 (Photos: PopTech)

Esther Duflo, another French economist who addressed G20 ministers this week, told journalists the money should be given to developing countries to deal with climate change.

The best use, she said, is for the money to go to poor people before a climate shock like a heatwave hits, for their communities to protect them through measures like air-conditioned public spaces, and to governments for reinsurance against climate disasters.

From academia to politics

A billionaires tax has long been pushed by progressive economists like Zucman and Joseph Stiglitz. But it has been taken from academia onto the political agenda by the G20 presidency of Brazil’s left-wing government led by President Luiz Inácio Lula da Silva and Haddad.

Zucman presented the proposal at a G20 finance ministers meeting in  Sao Paulo in February. It was the “first time these issues of inequality, progressive taxation [and] extreme wealth concentration were discussed in such a forum”, he said, adding that the “vast majority praised Brazil for putting those issues on the agenda”.

The main barrier, he said, is that billionaires will fight back against it. “They have a particular hatred for any kind of tax based on wealth. Why? Because that’s the one tax that really works for them,” he said.

Gabriel Zucman speaks at the World Economic Forum in Davos last year (Photos: World Economic Forum)

But E3G analyst Sima Kammourieh, a former economic adviser to the French government, was more pessimistic about the prospect of a billionaires tax being implemented. She “wouldn’t completely rule it out, but it’s something which could take many many years to come to fruition”, she said.

Although Zucman insisted the tax could go ahead without the US on board, Kammourieh warned that a Donald Trump victory in the US elections in November would be damaging. Joe Biden has called for higher taxes on billionaires, while Trump is one of the world’s nearly 3,000 billionaires.

Elsewhere at the Spring Meetings in Washington this week, France, Kenya and Barbados launched a taskforce to examine how to fill the gap in climate finance for developing and vulnerable countries – excluding China – which will need investment of $2.4 trillion per year by 2030, according to economists Vera Songwe and Nicholas Stern.

The taskforce will consider taxes on wealthy people, plane tickets, financial transactions, shipping fuel, fossil fuel production and fossil fuel firms’ windfall profits. It will also mull redirecting state fossil fuel subsidies to a new global loss and damage fund and windfall taxes on fossil fuel producers when prices are exceptionally high.

The plan is for one or more proposals to be presented to governments with the aim of securing international agreement at the COP30 UN climate summit in Brazil in late 2025.

(Reporting by Joe Lo; editing by Megan Rowling)

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The value of biodiversity to the poor must be taken into account when measuring economic wealth, influential environmental economist Pavan Sukhdev has warned.

The economic value of ecosystem services – for example clean air, water, food and timber – has risen to prominence in recent years but the concept of natural capital should not just be for big corporations.

The Economics of Ecosystems and Biodiversity (TEEB) programme, which Sukhdev leads, aims to build a compelling economic case for the conservation of ecosystems and biodiversity.

Sukhdev said the TEEB study underlines the importance of protecting biodiversity for the poorest communities around the world.

“If you lose nature it is the poor farmer whose fields suffer from a lack of nutrients and fresh water; it is the poor farmer’s wife who can not go and collect fuel wood from the forest and it is the farmer’s cattle and goats that can not go and feed on the leaf litter in the forest,” he said.

“When you start to account for the invisible and unaccountable services, which do not enter GDP, then you can understand the nature of the livelihoods of the poor.

“I think it underlines the underlying understanding we must have for biodiversity, which is that biodiversity is not merely a luxury for the rich, it is a necessity for the poor.”

The TEEB report highlights that for countries including India, Indonesia and Brazil poor, rural and forest communities all depend on biodiversity.

In India for example 350 million people live in households where 45% of the income was dependant on nature, while in Brazil 20 million people live with incomes 89% dependant on biodiversity.

He warned that a more inclusive way of measuring wealth must be found that takes into account natural, social and human wealth and acknowledges the role natural wealth has in driving development.

“You can not manage what you do not measure and unfortunately our accounts across all nations use a current system of national accounting that does not reflect the value of ecosystem services. It does not reflect the loss of this value, when we lose forests, when we lose wetlands and when we lose the quality of nature,” he said.

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Whether a success or failure, Rio+20 has firmly put sustainable development back on the agenda of governments across the world.

As the UK delegation headed out to Rio last week – led by Deputy Prime Minister Nick Clegg and Environment Secretary Caroline Spelman – they aimed at focusing on several key areas; making the case for the green economy, pushing the concept of GDP+ to measure growth alongside the well-being of society and pushing for the Sustainable Development Goals.

The final document which came out of the conference – while criticised by many for being light on action – did recognise all three of these principles and puts the world at the beginning of a pathway towards these aims.

DfID say access to modern energy will be vital in eradicating poverty (© UN Photo/Staton Winter)

Now the real work begins, as governments, civil society and the private sector put these words into actions. The UK’s Department for International Development (DFID) and the UK government will play a key role in this transition, with Prime Minister David Cameron co-chairing the high-level panel for a post-Millennium Development Goal framework.

RTCC spoke to Melinda Bohannon, Head of the Climate and Environment Strategy Unit at DFID about how they define sustainable development, what the Sustainable Development Goals (SDGs) should look like and how climate change is impacting the development agenda.

RTCC: This year is the year of Sustainable Energy for All. How vital is ensuring energy access to alleviating poverty?

MB: Dependence on fossil fuels is not sustainable in the long term – either economically or environmentally – so it is vital we address energy access in a way that reduces dependencies on fossil fuels and contributes to energy security objectives and builds local resilience.

Access to modern energy technology, such as electricity and efficient cooking facilities, plays a crucial role in fighting poverty.

Today, using smoky stoves to cook is estimated to cause as many as 1.5 million premature deaths a year. Helping the poorest access modern and efficient energy services can help some of the most vulnerable people in the world, especially girls and women, and improve their health, education, and economic options.

That’s why the Coalition Government works hard to support and build local markets and innovation in the private sector to help millions of the poorest people as part of our commitment to fight poverty through our investment into sustainable energy.

World leaders at Rio have set the world on a pathway towards sustainable development (Source: Flickr/UN_Photo_Conference)

RTCC: Sustainable Development is a word which is being discussed and debated around the world now, with many disagreements over what it actually means, what does this term represent for DFID?

MB: DFID’s goal is the eradication of poverty and from this goal springs our understanding of sustainable development.

We aim to balance different, and often competing, development needs against an awareness of the wider environmental, social and economic situation to ensure that we help the poorest without disadvantaging other groups or damaging the natural environment on which the growth is based.

We want to make sure all our work is socially, environmentally and economically sustainable so we make a real and lasting difference. We want to take wide-angled view of development and not be driven by one particular need without fully considering the wider or future impacts.

The Government is promoting the need to value natural resources correctly to help when making decisions that could have a big impact on the environment, such as setting the right business incentives, involving the private sector, and recognising the importance of open access to information.

RTCC: One of the major talking points at the Rio+20 conference was the idea of a new set of SDGs, and the outcome sets out the pathway to agreeing these goals in the future. How do we ensure these goals address the three pillars of sustainable development?

MB: The Millennium Development Goals (MDGs) have played a critical role in shaping the international development agenda and galvanising action over the last decade. The UK Government is committed to reaching the MDG target by 2015 and has already announced efforts to step-up contributions to core development areas such as health and education.

It is clear that thinking behind the idea of SDGs draws on the experience of the MDGs. The UK thinks that SDGs could be a way to draw more attention to those development issues requiring us to bring together all three dimensions of sustainable development: social, economic and environmental.

That’s why we’re pushing for a short, focused set of SDGs on food, energy and water, and for those SDGs to be developed as part of the broader process to elaborate a post-2015 international development agenda.

RTCC: Could we (and should we) have a set of all-encompassing goals? What lessons can we learn from the MDG process in setting out these new goals?

MB: The UN Secretary General Ban Ki-moon has announced a High Level Panel to consider exactly how to build on the successes of the MDGs and to secure a framework for development going forward.

The UK will play a critical role with the UK Prime Minister, David Cameron, one of the co-chairs alongside the Presidents of Indonesia and Liberia. Certainly we can see that part of the success of the MDGs is their relative simplicity.

This is something that we will want to hold on to in thinking about how best to bring in not only the critical issues of sustainable development being discussed at Rio but also other important issues such as promoting growth and tackling corruption.

Climate change threatens many vulnerable areas around the world (© DfID)

RTCC: With many of those living in the poorest place increasingly impacted by climate change, how have development priorities changed over the last 20 years because of this?

MB: Climate change is one of the most urgent environmental challenges facing the world today. The UK’s Humanitarian Emergency Response Review predicted that 375 million people will be affected by climate related disasters by 2015 every year and the number is expected to increase over time. As droughts, floods and famines set to increase in frequency and intensity and plunge the poorest deeper into poverty, we have to act now to minimise the impact of climate change on DFID’s work.

We have therefore prioritised those sectors most vulnerable to climate impacts and where adaptation support has yet to reach. We have also prioritised those countries and regions that are most vulnerable, but have the capacity to demonstrate the greatest results.  We will work with the private sector to design and deliver programmes to demonstrate what works.

RTCC: In a period of increasing difficulties worldwide, how important has it become to find innovative way of raising funds for climate adaptation and development and ensure the funds go to the right places and the right people?

MB: We need to provide a truly comprehensive and integrated response to the challenges of development and climate change, and finding innovative ways to do this is both essential and urgent. There is huge potential for innovative financing mechanisms to grow and help deliver the money needed to help poor countries to adapt to change.

The UK’s International Climate Fund brings in additional funding from the private sector and looks at less traditional means of channelling funds to those most in need.

We also support initiatives, such as the Clean Development Mechanism and the International Finance Facility for Immunisation, which have raised up to US $5.5 billion for the health sector and $31 billion for the environmental sector since 2002.

Most importantly, the UK is committed to making sure the aid we direct to the poorest people to grow and adapt to climate change actually reaches them.

The UK Government has a zero tolerance approach to corruption and we do not tolerate corruption or misuse of taxpayers’ funds in any form. All allegations of fraud are taken very seriously, and we have robust systems to safeguard aid money and make our systems even stronger.

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Brundtland calls for poverty eradication to boost sustainable development ahead of Rio+20 (source: Mosseby/creative commons)

Poverty eradication should be used as a catalyst for sustainable development and climate action, according to the former Norwegian Prime Minister, Gro Harlem Brundtland.

Brundtland was a key author in the 1987 Brundtland report, which for the first time clearly defined sustainable development.

And she says with the Rio+20 summit in June approaching, the recommendadtions published 25 years ago are still relevant today.

In an interview with The Week she said the political and economic changes needed to face the challenges of climate change were not getting enough support around the world.

“We are still not seeing eye to eye on how this has to be solved. If we continue like business as usual, it is going to be a disaster,” she said.

“So the leaders and populations have to face the challenges in cooperation and by sharing the responsibility for the future.”

“Having said this, in the last [climate] meeting in Durban, everyone, including India, agreed on a framework that included all kinds of countries. But the details – in the coming years how they are going to find a common solution – are still not here.”

She called for action to eradicate poverty to be coupled with action on sustainable development, offering the biggest potential moving forward.

“The climate challenge illustrates how we have to change,” Brundtland said. “The developing countries need more support and opportunities to develop and use clean energy. Because if the current situation continues, then the world will not be able to handle this burden.”

“And that’s why the rich world has to be forthcoming to help change the patterns of development. Because in developing countries, poverty has to be overcome and energy is crucial to this and that means we need more clean energy across the world.”

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