EU TAX OBSERVATORY SAYS IMPOSE 2% TAX ON SUPER-RICH TO COMBAT TAX EVASION, BRING PARITY

Tue 24 October 2023:

In order to reduce worldwide tax evasion, the European Union (EU) Tax Observatory has suggested in its report that ultra-wealthy people should be subject to a global minimum tax.

The total fortune of the estimated 2,500 billionaires is $13 trillion.

According to the observatory’s report, which is affiliated with the Paris School of Economics, governments might generate almost $250 billion annually if they began taxing billionaires at a rate of two percent.

Quentin Parrinello, a senior policy adviser at the EU Tax Observatory, told the BBC that global billionaires “structure their wealth so it does not generate a lot of taxable income”.

He admitted that imposing a 2 per cent tax on billionaires may sound “utopian”, but “so was the idea of asking Swiss banks to exchange tax information with tax authorities 10 years ago and now this is a central provision of the fight against tax evasion”.

The report says that the super-rich have been able to successfully use complex business structures for offshore tax evasion, while most people end up paying the taxes.

The research states that the automatic sharing of the wealthy’s account information across more than 100 countries can significantly reduce offshore tax evasion.

The report said that billionaires avoid paying tax rates equal to 0 per cent or 0.5 per cent of their wealth “due to the frequent use of shell companies to avoid income taxation”.

The study did highlight the agreement reached by 140 countries in 2021 to ensure companies pay at least 15 per cent in corporation tax, but the initiative, it said, had been “dramatically weakened” since then by a “growing list of loopholes”.

Joseph Stiglitz, the Nobel Prize-winning American economist, in an introduction to the report, warned that unfairness in taxation poses a risk to democracy, reports BBC.

“If citizens don’t believe that everyone is paying their fair share of taxes – and especially if they see the rich and rich corporations not paying their fair share – then they will begin to reject taxation.

“Why should they hand over their hard-earned money when the wealthy don’t? This glaring tax disparity undermines the proper functioning of our democracy; it deepens inequality, weakens trust in our institutions, and erodes the social contract.”

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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