Finance leaders from the Group of 20 major economies issued their first-ever joint declaration on Friday, Reuters reported. They committed to cooperating on effectively taxing the world’s wealthiest individuals.
However, this unity masks deeper disagreements about the appropriate forum to advance this agenda.
In their joint communiqué and a separate declaration on international tax cooperation, G20 finance ministers and central bankers agreed to pursue fair taxation of “ultra-high-net-worth individuals.”
The final draft of the G20 ministerial declaration in Rio de Janeiro, seen by Reuters, emphasizes a cooperative approach to ensuring that these individuals are effectively taxed.
Despite this united front, significant divisions have emerged over whether discussions should proceed under the auspices of the United Nations or the Organization for Economic Cooperation and Development (OECD), a group of wealthier democracies established by the U.S. and European allies.
U.S. Treasury Secretary Janet Yellen, in remarks to Reuters on the sidelines of the G20 meeting, expressed her preference for the OECD, which has led negotiations for a global corporate tax deal over the past three years.
Yellen argued that the OECD, as a consensus-based organization, is better equipped to handle such talks, noting that the UN lacks the technical expertise required.
Major developing nations, however, are resistant to this approach. An official familiar with the matter told Reuters that Brazil, under its G20 presidency, should advance discussions at both the UN and the OECD.
Nobel laureate Joseph Stiglitz and other advocates for a global minimum tax on billionaires argue that the UN is the proper forum for global tax cooperation.
They urge G20 leaders to align with progress being made at the UN and to establish a truly democratic process for setting global standards on taxing the ultra-rich. These advocates believe that entrusting this task to the OECD, a club of mostly rich countries, would not suffice.
Guilherme Mello, a Brazilian Finance Ministry official, acknowledged that the UN Framework Convention on International Tax Cooperation represents a victory for developing nations seeking better representation, as most countries are not OECD members.
Mello emphasized that ongoing discussions on how to effectively tax the super-rich signify progress, regardless of the forum. The shape this will take depends on many dialogues that will be held, he noted.
Skepticism remains about the feasibility of implementing a global “billionaire tax.” European officials pointed out that even the 27-nation European Union lacks the power to tax as a bloc.