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26th Feb 2024

Report: Tax richest 0.5%, raise €213bn for EU coffers

  • Pension rally in Paris, January 2023. The richest 0.5 percent own almost one-fifth of total wealth (Photo: Jeanne Menjoulet)
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About €213bn a year more for the public coffers of the EU-27 — that would be the potential impact of a 1.7-3.5 percent tax on the richest 0.5 percent, according to a new study by the Greens in the European Parliament.

The figure would rise to €272.8bn if combined with the fight against tax avoidance by the super-rich in secretive jurisdictions, such as Bermuda or the Cayman Islands, which the Greens estimate as being worth €59.5bn a year.

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The European countries that lose the most tax revenue to those who hide their wealth in tax havens are Ireland, Luxembourg, and Germany.

"The EU must address loopholes and secrecy laws in jurisdictions worldwide that allow EU citizens to hide their activity and wealth," MEP Kira Peter-Hansen (Greens/EFA) said.

The study 'Tax the rich: from slogan to reality' simulates the potential implementation of a tax similar to the one introduced by Spain in early 2023.

This year, the Spanish solidarity tax, a temporary levy on the rich, has raised €623m. However, as in other European countries, the measure has its limitations.

Progressive taxes on wealth are not new in Europe. Belgium, Italy, and France also have similar schemes, but all are "modest" in scope, the report points out.

"They only target specific asset classes in the cases of France and Italy or are applied at a subnational level (Spain), thereby diminishing their overall effectiveness in implementation," reads the report.

And, contrary to any myth, the tax would not hit the middle class. In Germany, the tax would be levied from €2,835,533, in France from €3,642,667, while in Poland the threshold would be €749,441.

Even in the worst-case scenario, the tax on the wealthiest would result in only €4.8bn less revenue due to an extreme migration response.

"The EU can also start taxing the richest more by introducing a minimum taxation for capital gains and by tackling tax avoidance with a European assets registry and stronger measures against tax havens that both companies and individuals use to dodge paying their fair share of tax," Oxfam tax policy advisor Chiara Putaturo told EUobserver.

Gender inequality

About half of Europe's population owns 3.5 percent of total wealth, while the richest 0.5 percent own almost one-fifth and have seen their wealth increase by 35 percent over the past decade (adjusted for inflation).

Moreover, men own on average 50 percent more wealth than women, and since women are more dependent on income from work than on wealth, they bear a disproportionate tax burden.

This is why taxing the richest is a way to tackle inequalities such as gender inequality, the report stresses — as well as an alternative to increasing debt burdens in EU countries to increase their public revenues.

"We can only face down the problems of poverty, social cohesion, and climate change if we start to address the inequalities in our system," Peter-Hansen said.

With the revenue from taxing the rich and tracking down assets hidden in tax-havens, member states could hand out a check of €1,386 a year to European taxpayers.

Put another way, these new funds could cover 23 percent of health spending across all countries or increase the education budget by almost 40 percent, the Greens point out.

It would also be a way to finance the green transition, as called for in a European Citizens' Initiative registered in June by a group of activists, economists, and politicians to introduce a tax on the richest one percent to fund EU social and environmental transitions.

"The wealthiest Europeans must foot the climate bill," Putaturo said, adding: "After all, a billionaire is, on average, responsible for over one million times more carbon than the average person".

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