Going global?

Spain's temporary wealth tax, introduced by Pedro Sánchez in late 2022, holds the key to dealing with climate change. That's the conclusion reached by the Tax Justice Network (TJN), writes SUR columnist Mark Nayler

Mark Nayler

Malaga

Friday, 23 August 2024, 16:02

Spain's temporary wealth tax, introduced by Pedro Sánchez in late 2022, holds the key to dealing with climate change. That's the conclusion reached ... by the Tax Justice Network (TJN), a UK-based advocacy group that combats tax evasion and offshore banking. In a report published this week, the TJN claims that, if governments around the world copied Spain's example and applied a 'featherlight' tax on the richest 0.5% of their populations, $2 trillion could be raised to finance the climate transition.

On its website, the TJN announces that "governments have programmed [tax] systems to prioritise the wealthiest over everybody else, wiring financial secrecy and tax havens into the core of our global economy". Doesn't that sound rather like a conspiracy theory? As if the TJN believes that a self-interested global cabal, consisting of governments, wealthy individuals and corporations, is intent on making the rich richer and the poor poorer?

But if that fundamental assumption is wrong, as there are good reasons to think that it is, then it's likely that many of the TJN's specific proposals are also based upon flawed premises.

So it proves in this case, because the TJN mistakenly assumes that a net wealth tax has worked in all the countries in which it has been adopted. Why, then, is Spain one of only four OECD countries that still imposes such a regime, along with Norway, Colombia and Switzerland?

Levies that target the assets of wealthy individuals have proved divisive, expensive to administer and unable to generate the amount of money that might (and that's a big 'might') justify their existence - which is precisely why countries such as Denmark, Germany, France, the Netherlands and Austria have scrapped them. Why assume that a global wealth tax would be free of such impediments to success?

There are also issues of fairness and liberty to consider. Madrid and Andalucía have challenged Sánchez's 'solidarity' tax on the basis that it fails to respect constitutionally-protected regional autonomy; in 1995, Germany's constitutional court declared the country's wealth tax unconstitutional; and in 2021, the Dutch supreme court ruled that such levies violate EU laws regarding property rights and non-discrimination.

Ah, but that's just because all those courts and governments, along with the planet's biggest corporations and richest individuals, are part of an international cartel aimed at enriching its members at the expense of everyone else. Right? Well in that case we should be giving less, not more, money to national governments. If the world is as the TJN believes it to be, a global wealth tax would merely transfer funds from corrupt tycoons to crooked politicians, then back to the tycoons again and so on - in an endless, closed cycle of ruinous self-interest.

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