Europe can collect nearly 230 billion USD each year if it taxes the rich

Taxing the wealth of the richest 0.5% of the population in each member country, Europe can increase budget revenue by more than 227 billion USD.

This idea is stated in a study recently published by the Liberal Alliance Group in the European Parliament, two weeks after economists and politicians called for a tax on the super-rich at the Summit. G20 summit in New Delhi (India).

Accordingly, if a wealth tax was imposed on the richest 0.5% of each European country, the bloc would collect more than 213 billion euros (more than 227 billion USD) each year. This 0.5% group holds almost 20% of Europe's wealth, compared with 3.5% for the poorest half of the population. Furthermore, their assets have increased by 35% in the past 10 years. The study was commissioned by the non-governmental organization Tax Justice Network.

British millionaire Phil White called for "taxing the rich" at the World Economic Forum in Davos, Switzerland, January 18. Photo: AFP

Germany and France would gain the most from taxing the rich, more than 65 billion euros ($69.3 billion) and over 46 billion euros ($49 billion), respectively. In Southern Europe, countries will also benefit to different degrees, such as Italy gaining 27.2 billion euros (28.9 billion USD) while Portugal and Greece have an additional 3.7 billion respectively. euros (3.9 billion USD) and 1.4 billion euros (1.49 billion USD).

Unlike the tax on the rich passed in Spain or the real estate tax in France, the Liberal Coalition's tax proposal applies to all types of assets from real estate to money. bank deposit, company stock to artwork.

If implemented, tax revenues from the rich would account for 1.35% of EU GDP, not including the expanded impact of tackling tax evasion by wealthy individuals in tax havens.

In France alone, tax revenue from the super-rich will account for 1.75% of GDP. It would significantly improve spending on education (35%), healthcare (18%), or even cover three-quarters of the government's expected new spending on the energy transition. For debt-heavy countries like Greece, additional tax sources will help pay salaries for more than 100,000 primary school teachers or significantly increase the education budget.

Claude Gruffat, a member of the European Parliament's Economic and Monetary Affairs Committee, said it was a good idea to focus on the extremely wealthy and avoid the rest. "Up to now, we have prioritized austerity over taxing the rich, but people are struggling and the issue of wealth redistribution has become important," he said.

The study also denies the risk of millionaires leaving if their wealth is taxed. A common tax across the bloc will further reduce that risk. It is estimated that only 3.2% of affected millionaires are at risk of emigration. "Studies have shown that the migration impact is negligible," Mr. Gruffat asserted.

In a context of rising inequality, the idea of ​​taxing the super-rich has growing support, including among neo-liberal economists. reduce government intervention and promote free markets.

However, many difficult questions remain regarding the practical implementation of this new tax. For example: What is the tax base? Should corporate stock be excluded to avoid large entrepreneurs and CEOs having to sell their business assets to pay taxes? What about constitutional barriers? Would it be better to implement this idea at the level of the United Nations or the Organization for Economic Co-operation and Development (OECD), which offers a global minimum tax?

Former Colombian finance minister José Antonio Ocampo signed a petition calling for a tax on the rich in New Delhi. He hopes for an international agreement, with all countries agreeing to implement a minimum tax on assets. He believes that rising inequality and its accompanying effects cause social discontent and are one of the main drivers of increasing political polarization and populist nationalism.

"The extreme concentration of wealth in the hands of a few people is neither socially nor politically sustainable," Ocampo said.