by Ambra Visentin

More taxes not only on multinationals but also on the world’s super-rich to finance the ecological transaction. This is the proposal that Socialist MEPs Aurore Lalucq (France) and Paul Magnette (Belgium) intend to present to the European Commission today, 8 May, using the instrument of the ‘European Citizens’ Initiative’. The date is no coincidence as it coincides with ‘ECI Day’, an annual event organised by the European Economic and Social Committee. The instrument of the ECI is a mechanism of European democracy that involves first setting up a group of organisers made up of at least 7 EU citizens living in 7 different European countries and then, within 12 months, gathering the support of at least 1 million people, with a minimum number of signatures in at least 7 EU countries – signatures that must be verified by the authorities of each country before the petition is submitted. One of the campaign’s initiators is economist Gabriel Zuckman.

A global minimum tax of 15 per cent on multinationals, triggered by the 2021 G7 agreement and aimed mainly at making Big Tech multinationals pay ‘their fair share’, will come into force this year. However, it is well known that the ecological transition requires huge resources if it is to be tackled with the urgency that climate change demands of us. That is why Magnette has decided to put back on the political agenda the issue of progressive taxation at international level of the so-called ultra-rich, who, as Lalucq points out, pay less tax than other taxpayers in relation to their income. For both, it is a question of social justice.

In the recent past, other countries have considered introducing this type of tax in order to cover the costs of the green revolution, which is now unavoidable, especially given the deterioration in relations with China and the need for greater autonomy, especially with regard to the raw materials needed for the transition – just think of lithium – or even semiconductors, the basis of all technological development, for which the European Union has provided for “reshoring”, i.e. the relocation of production and the strengthening of research and development within its borders. 

California made an unsuccessful attempt with an initiative called ‘Proposition 30’, which would have imposed an additional 1.75 per cent tax on incomes over $2 million. Most of the money would have been used to fund incentives for the purchase of electric vehicles and the installation of electric vehicle chargers, with a large proportion going to low-income communities. Another 20 per cent of the funds would be used to pay for forest fire prevention and additional training for firefighters.

A heated debate has also taken place in Germany, where a one per cent wealth tax was in force between 1923 and 1996. Proponents of its reintroduction see it as a way of reducing inequality in society and allowing the population to share in prosperity through income. Critics, on the other hand, point out that this type of measure encourages the ultra-rich to transfer their wealth abroad. Reiner Holznagel of the German Taxpayers’ Association pointed out that the wealth tax introduced by French President Hollande would lead to a withdrawal of 35 billion euros from French territory.

Individual countries such as Germany, where runaway inflation is rapidly pushing out the poorer sections of the population, may find it politically difficult to address the issue of introducing a wealth tax. According to Lalucq, the European Union is more progressive in this respect and therefore has a better chance of success. If the proposal is adopted, the new tax would apply to all member states.

 Cover image: Paul Magnette, © PES Communications on Flickr