Wealth tax on the super-rich could raise £1.5 trillion globally, campaigners claim

19 August 2024 , 08:12

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Wealth tax on the super-rich could raise £1.5 trillion globally, campaigners claim

The Tax Justice Network said trillions could be raised with a ‘featherlight’ tax on the 0.5% of richest households, copying a current Spanish tax

Governments around the world copying Spain’s wealth tax on the super-rich could raise more than $2tn (£1.5tn), according to campaigners calling for the money to help finance the climate transition.

As a growing numbers of countries consider raising taxes on the ultra-wealthy, the Tax Justice Network campaign group said in a report that evidence from a “featherlight” tax on the 0.5% richest households in Spain could help raise trillions of dollars globally each year. 

The Spanish government, under the socialist prime minister, Pedro Sánchez, introduced a temporary “solidarity” wealth tax in late 2022, which is collected in 2023 and 2024, on the net wealth of individuals exceeding €3m (£2.6m). It is estimated to apply to the richest 0.5% of households.

The Tax Justice Network said applying a similar tax on the top 0.5% wealthiest households worldwide, at a rate of between 1.7% and 3.5%, would raise about $2.1tn. The study excluded some exemptions in the Spanish tax – including for shares in listed companies, intellectual property and industrial property, and some high-value assets such as boats and aircraft.

It said as much as $31bn a year would be raised from the UK.

The study comes as the G20 explores plans for a global minimum tax on the world’s 3,000 billionaires under the Brazilian presidency of leftwing leader Luiz Inácio Lula da Silva. France, Germany, Spain and South Africa have also indicated support for the proposals.

However, reaching any agreement is likely to take years, and could face opposition in several 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.”

Despite headlines warning that the ultra-wealthy could move elsewhere, the Tax Justice Network said previous reforms in some nations had not resulted in the super-rich relocating.

As few as 0.01% of the richest households relocated after wealth tax reforms in Norway, Sweden and Denmark, while a UK study estimated that 2017 changes to non-dom rules led to a migration rate of as low as 0.02%.

In the UK, Rachel Reeves has previously ruled out the introduction of a new wealth tax. However, the chancellor is abolishing non-dom status to raise more than £5bn. She is also thought to be considering increasing taxes on capital gains, inheritances, and pensions for the 30 October budget.

David Wilson