Wednesday

21st Feb 2024

Wanted: 1m signatures for EU tax on super-rich

  • Over the past decade, the richest one percent have accumulated more than half of the new wealth created (Photo: Michael Heuser)
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A new European tax on the richest one percent is now a step closer to being proposed, although there is still a long way to go — and resistance from its most ardent opponents remains strong.

Last June, a group of activists, economists, politicians and even some billionaires, registered a European citizens' initiative, calling on the EU to introduce a tax on the very rich to fund social and environmental transitions.

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"In order to address these challenges, there is an urgent need to fundamentally redirect the European Union towards a just and democratic climate transition," the petition states.

The problem, the authors argue, is that the existing mechanisms for addressing these challenges will not be sustainable in the long term, so the EU will need new resources of its own to finance its functioning.

What they propose is that the richest would fund the support for the poorest and the transitions the EU is navigating.

To this end, they have registered a European citizens' initiative, a participatory mechanism introduced in 2012 that allows citizens to ask the EU for new legislative proposals.

The commission has now given them the legal go-ahead, and the next step will be to collect a million signatures to give them an official response. But that is no guarantee of success.

At the end of the process, the commission must respond, but it is not obliged to propose legislation.

"Even where it responds positively, the most appropriate follow-up to an initiative may be non-legislative in nature," it says on its website.

Since then, more than 100 initiatives have been submitted — but only eight have received an official response from the commission. Some 56 did not reach the million signature threshold and 21 were withdrawn before they could be examined.

And this initiative calls precisely for three new legislative measures.

The first is for the Commission to propose a directive for a European tax on large fortunes.

Second, that an amendment be introduced to allow this new revenue to contribute to the EU's own resources' system.

Finally, that these new resources be used to put forward new measures to tackle social and climate challenges.

Another tax?

Over the past decade, the richest one percent have accumulated more than half of the new wealth created. After Covid-19, the trend became even more pronounced, when they captured almost two-thirds of the wealth produced, according to an Oxfam report.

The NGO estimates that a global wealth tax could lift two billion people out of poverty, and that an annual wealth tax of up to five percent on Europe's billionaires could raise nearly €250bn a year.

Oxfam's estimate assumes a two percent tax rate for those with assets over $5m [€4.5m], a three percent tax rate for those with assets over $50m and a five percent tax rate for billionaires.

At a popular level, the answer would have more support than opposition, according to an Eurobarometer survey last year in which 67 percent of European citizens agreed that an important task for their national government was to tax the rich to support the poor.

This was pointed out during a debate in Strasbourg on Wednesday (12 July) by MEP Aurore Lalucq, one of the signatories of the initiative along with French economist Thomas Piketty and Belgian socialist party leader Paul Magnette.

For Putaturo, given the current level of social inequality in Europe, it is also up to the EU to "give an answer to the citizens".

Whether it is feasible, given the EU's limited powers in fiscal matters, the Oxfam expert points out that it was possible when all member states agreed on a windfall profits tax for energy companies.

"If there is political will, it is possible," Putaturo says.

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