Background and Relevance of the Initiative
Spain and Brazil have jointly proposed an initiative during the IV International Conference on Development Financing of the United Nations in Sevilla. The aim is to promote global taxation of the ‘ultra-wealthy’ to address growing wealth inequality issues, as reported by the Ministry of Finance through a press release.
The “Consenso de Sevilla” and its Global Impact
This initiative builds on one of the commitments outlined in the “Sevilla Consensus,” ratified by 192 countries. Titled ‘Effective Taxation of Individuals with High Net Worth: Taxes on the Ultra-Wealthy,’ this proposal is led by Spain’s Vice President and Minister of Finance, María Jesús Montero; Spain’s Minister of Economy, Carlos Cuerpo; and Brazil’s Minister of Finance, Fernando Haddad. The goal is to foster an international debate ensuring progressive and efficient tax systems worldwide, aiming to reduce social inequality.
Addressing Extreme Inequality
The proposal by Spain and Brazil stems from the need to tackle extreme inequality and achieve greater wealth redistribution through a progressive and fair tax system where those with the most assets pay more. Currently, the wealthiest 1% globally possess more than the bottom 95% of humanity.
In 2024, during the G20 leaders’ meeting in Rio de Janeiro, an unprecedented collective agreement was reached to cooperate on implementing an effective tax agenda for High Net Worth Individuals (HNWI).
Building Support and Collaboration
Within the framework of the International Conference on Development Financing in Sevilla, Spain and Brazil have agreed to draft a work plan within three months to advance this initiative. Regular meetings, including at least one annual in-person gathering, will be held to gradually include more countries and evaluate tax legislation related to large wealth taxation in each territory.
This initiative is open to civil society and international institutions, emphasizing multilateralism and international cooperation.
The Dangers of Inequality
According to the declaration presented by Spain and Brazil, without proper measures, extreme inequality will continue to rise, undermining growth, sustainability, and public trust in democracy.
A significant cause of this growing inequality is the low tax contribution from high-net-worth individuals, who often enjoy significantly lower effective tax rates than average workers or citizens.
To rectify this, the proposal aims to encourage and guide countries to join the initiative and address political, administrative, and data deficiencies. It ensures that high-net-worth individuals pay taxes more effectively according to their wealth.
“To achieve this, international cooperation in multilateral forums is essential to promote and facilitate the implementation of evidence-based reforms on taxing large fortunes in various countries,” the text emphasizes.
Key Questions and Answers
- What is the main goal of this initiative? The primary objective is to promote global taxation of ultra-wealthy individuals, aiming to address growing wealth inequality and foster a more progressive and efficient tax system worldwide.
- Who are the key figures behind this initiative? The initiative is led by Spain’s Vice President and Minister of Finance, María Jesús Montero; Spain’s Minister of Economy, Carlos Cuerpo; and Brazil’s Minister of Finance, Fernando Haddad.
- What is the significance of the “Consenso de Sevilla”? The “Sevilla Consensus” is a commitment ratified by 192 countries, including this initiative aimed at promoting effective taxation for high net worth individuals.
- Why is addressing extreme inequality crucial? Without proper measures, extreme inequality will continue to rise, undermining growth, sustainability, and public trust in democracy.
- How does this initiative plan to tackle low tax contributions from high-net-worth individuals? The proposal aims to encourage and guide countries to join the initiative, addressing political, administrative, and data deficiencies to ensure high-net-worth individuals pay taxes more effectively according to their wealth.
