The progressive taxation of wealth is a powerful tool in addressing global inequalities and mobilising resources for sustainable development. As the world grapples with rising economic disparity, financial transaction taxes (FTTs), net wealth taxes, and resource rent taxes emerge as viable solutions for domestic resource mobilisation. These mechanisms support poverty eradication, reduce inequality, and align with Sustainable Development Goals (SDG) 1 and 10.
The Urgent Need for Wealth Taxation
Economic inequality has reached unprecedented levels, with the top 1% accumulating vast wealth while the bottom 50% struggles to access basic services. The 2022 World Inequality Report highlights how wealth concentration has intensified, exacerbated by the COVID-19 pandemic. In regions like Sub-Saharan Africa, extreme poverty persists despite economic growth, largely due to regressive tax structures reliant on consumption taxes like VAT.
Key Tax Instruments for Domestic Resource Mobilisation
- Financial Transaction Tax (FTT): A minimal levy on financial trades could generate substantial revenue while curbing speculative trading. Studies suggest an FTT could yield up to $900 billion annually, providing crucial funds for social and economic infrastructure.
- Net Wealth Tax: Progressive wealth taxation in European and Latin American countries demonstrates its potential. A global wealth tax on the richest 3,000 individuals could raise approximately $250 billion annually.
- Property Taxation: Equitable and efficient, property taxes target high-income earners and provide a stable revenue source for urban development.
- Resource Rent Tax: Extracting fair taxation from natural resource industries ensures that economic rents benefit broader society rather than private corporations.
The Role of the G20 in Advancing Progressive Taxation
The G20 presents a critical platform for promoting wealth taxation as a strategy for reducing inequality and eradicating poverty. By supporting international tax cooperation, particularly through the UN framework, global leaders can drive the implementation of progressive tax policies that foster inclusive economic growth.
Conclusion
Taxing wealth is essential for bridging the inequality gap and financing sustainable development. Policymakers must prioritise these progressive tax measures to ensure economic justice and long-term resilience. A fairer tax system is not just an economic necessity but a moral imperative.