International economic forums continue to move towards more progressive taxation. A system in which those who have the most are those who pay the most taxes, because “it is one of the key tools to reduce inequalities […]reinforce the sustainability of public accounts and promote sustainable, balanced and inclusive growth,” according to the latest statement from the G-20 finance ministers and central bank governors, published last Thursday.
All the countries in this forum that brings together the world’s main economies signed this text, even the representative of the Argentine government, chaired by the ultra-liberal Javier Milei and who had been speculated that he could block it. A permanent threat (also from the US and other countries) because the statement includes two progressive and historic objectives, which seek greater social justice. On the one hand, the intention to continue “working together […] in effective taxation, including that of people with very high net worth.” That is, in the design of a global and coordinated tax on the super-rich, as already advanced in the historic agreement reached in July in the same context of the G20, thanks to the leadership of the Brazilian presidency.
On the other hand, the statement emphasizes continuing to “encourage the framework” against BEPS [la erosión de la base imponible y el traslado de los beneficios de las empresas, según las siglas en inglés]. In other words, to implement a minimum tax on the profits of multinationals, to prevent them from taking advantage of the “loopholes” in tax havens and the Corporate Tax itself.
This statement coincided with the fall report of the International Monetary Fund (IMF) on the European region that supports “structural fiscal reforms” that raise taxes on the richest and on companies, as explained in this information. Along the same lines, the BRICS summit (the forum that brings together Brazil, Russia, India, China and South Africa) released a statement that added the initiative of “international cooperation” for a more “progressive and effective” taxation. , and also, specifically, about the super-rich.
All these steps must be finalized at the G20 summit to be held between November 18 and 19, again in Brazil, to which Spain will attend as a permanent guest.
Meanwhile, in our country, the coalition Government is negotiating the General State Budgets (PGE) for 2025. Some conversations with the different groups of the Congress of Deputies regarding which, initially, it was discounted that they would include the definitive development of the type minimum of 15% on the profits of large companies and the transformation of temporary levies on banking and energy companies into permanent taxes. The latter, deployed in 2022 due to the extraordinary benefits that these sectors were achieving due to the increases in interest rates and the inflation crisis.
At the moment, these taxes are up in the air, as acknowledged last Thursday by the First Vice President and Minister of Finance, María Jesús Montero, and as confirmed this Tuesday by the Minister of Economy, Carlos Body, in the press conference after the Council. of Ministers. The reason is that two of his main partners in Congress have threatened to break the investiture bloc again, the PNV and Junts. Both formations have aligned themselves with the interests of Repsol or Cepsa. These companies have an important weight in the industrial fabric and employment of Euskadi and Catalonia, the bases of the electorates of the nationalist parties, respectively, and in other regions.
In Tarragona, the first multinational has yet to confirm an investment of 1.1 billion euros in a pioneering project to convert urban waste into fuel that it has suggested it may end up taking to Portugal. On Friday, Cepsa joined this ‘campaign’. The second oil company in Spain, controlled by the emirate of Abu Dhabi, has paralyzed 3,000 million in investment in what is known as the Andalusian hydrogen valley until the Government clarifies whether or not it will maintain, and how, the tax on energy companies.
However, despite this ‘hostile’ context and parliamentary weakness, the “structural fiscal reform” recommended by the IMF or the measures discussed in the G20 are a path that the Government of Spain has committed to with the European Commission. In fact, it is the main way to comply with the new EU fiscal rules – which require reducing budget imbalances, deficits, and public debt. Furthermore, a majority of experts consider this tax reform essential, especially given the intention to also modify the regional financing system.
Taxes on banks and energy companies are up in the air
Taxes on banks and energy companies “are part of the Government’s agreement [entre PSOE y Sumar]”But we are aware that for them to be implemented they have to go through Congress, which requires a parliamentary majority and we are at that point of building that agreement around these two figures,” Carlos Corpus stressed this Tuesday.
“The implementation of these two taxes has been balanced. In two senses. “It has made it possible to make a fair contribution from these two sectors compatible at a time of rising prices – therefore, it has made it possible to finance the social shield that we have put on the table for families – with the best results in its history.” Finally, “it has coincided with a record arrival of investment, in sectors such as renewables,” commented the Minister of Economy.
“This element of balance has to be the starting point for the discussion of the permanence of these taxes. In addition, additional economic policy elements must be assessed, which do not only have to do with an emergency response”, such as the one that occurred in 2022. “In the energy field, for example, the importance of maintaining a high investment effort. And in the financial field, the importance of taking into account the evolution of the interest rate cycle and the evolution of bank accounts,” concluded Body.
A while before, after announcing (again) record profits, the CEO of Banco Santander, Héctor Grisi, warned that, “of course we do not see it as a good thing that they leave it permanent [el gravamen a las entidades financieras]”. As he listed: “It harms growth, it discriminates, it leaves us at a disadvantage compared to other countries. It is an income tax, it is poorly structured. If they go on those same bases it is completely wrong. In a bad cycle it will hit us because it can generate 50,000 million less credit. “We do not see any other country that raises it beyond 2024.”
Last week, in an article in La Vanguardia with the title Industry or populismthe CEO of Repsol, Josu Jon Imaz, assured that the special tax on banks and energy companies are “populist measures” within a strategy of “lack of social recognition of the value of the company, regulatory overlaps, the suffocation of industry, prohibitions instead of incentives and suffocating fiscal measures that penalize the generation of wealth and employment” that, “under the mantra of social welfare, seriously compromise the future model of this country.”
The Nobel Prize in Economics supports the greater progressivity of taxes
Contrary to these messages, top international economic thinking follows the trend of debates towards a more progressive taxation of the G20 or the IMF. The Turkish Daron Acemoglu, in his first article published in Spain after receiving the Nobel Prize in Economics in mid-October, titled ‘The rich should not be the heroes of society’. In his analysis, this expert used a sports example, comparing the active basketball star Lebron James with the myth Wilt Chamberlain. “While Chamberlain had an estimated net worth of $10 million at the time of his death in 1999, James’ net worth is estimated at $1.2 billion,” he recalls.
“Chamberlain lived in a time when sports stars did not earn what they earn today. This has partly to do with technology — today everyone can see James thanks to television and digital media — partly to do with norms — paying hundreds of millions of dollars to cultural superstars has become more acceptable — and partly to do “Part with taxes—if the United States still had a marginal income tax rate above 90%, James would have less money, and the country would have less wealth inequality,” explains Acemoglu.
Along the same lines, the Financial Times warned in a report this weekend that “a small number of billionaires could influence the outcome of the US presidential election, as many of the world’s richest spend hundreds of millions of dollars to help their preferred candidate win.” The prestigious newspaper specialized in economic information states that “billionaires have contributed 18% of the total campaign spending of candidates Kamala Harris and Donald Trump.”
“American billionaires are 0.0005% of the population, account for 5% of the total wealth and have financed a third of Republican Trump’s campaign. The triumph of plutocracy, in real time,” laments economist Gabriel Zucman, who signs the proposal for a 2% tax on the wealth of billionaires around the world that has been debated in the G20 forum, and which achieved a historic “support” from all countries in summer.
In recent days, as a culmination, the French Assembly began the development of “a tax on billionaires. A common sense measure, whose effect would be really modest: guarantee that the richest do not pay less taxes than the middle classes, as is the case today,” concludes Zucman.
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