The fruits of a global bn’aire tax scheme

What would it look like if global b’naires had to pay the taxman? A global scheme to tax the world’s 3k b’naires could raise up to USD 250 bn annually, according to a report (pdf) by French economist Gabriel Zucman, who maintains the scheme is feasible. Commissioned by Brazil, which currently holds the G20 presidency, the study highlights that the OECD’s recently introduced 15% global corporate tax attests to the potential success of imposing a global tax on wealthy individuals. Initially proposed by Brazil’s finance minister in February and endorsed by French Finance Minister Bruno Le Maire, the draft proposal will be on the table for discussion at the upcoming G20 finance ministers’ meeting in Rio de Janeiro next month.

The study proposes a minimum annual tax of 2% on individuals with a net worth exceeding USD 1 bn. That’s a departure from the current average tax rate among b’naires of 0.3%, albeit far below the global average income tax rate. Zucman recommends an additional levy to ensure b’naires contribute at least 2% of their wealth in taxes each year. The estimated tax revenue would be directed towards funding public services like education, healthcare, and climate change mitigation.

Not everyone is on board: Implementing a global tax could be impractical with the “two countries with the largest number of b’naires [being] the US and China. Neither will realistically implement this,” one tax policy pundit told the Financial Times, expressing skepticism about the practicality of the proposal. For the tax to be effective, the report stressed that it is essential for countries to establish enhanced cross-border information sharing mechanisms on affluent individuals, including improving the identification of beneficial ownership across various assets such as financial holdings, properties, companies, and other legal entities.

It’s not going to be easy, but it’s feasible — even with current global political turbulence, Zucman maintains. He points to the recent global corporate tax — which was met with fierce pushback and is yet to be ratified by the US Congress — as evidence of possible change, Bloomberg reports. However, for Brazil to garner support for the proposal after the end of its G20 presidency, it must demonstrate success with smaller reforms, as its “real challenge is to maintain visibility and momentum,” former chief broker for the global corporate tax agreement Pascal Saint-Amans told the news outlet.

MARKETS THIS MORNING-

All five major Asian benchmarks we follow are solidly in the red in early trading this morning. The ASX 200 (-1.3%) and the Nikkei (-1.1%) are leading the dip, followed by the Hang Seng, Kospi, and Shanghai Composite. The selldown comes as the JPY hit a 38-year low against the greenback, CNBC reports.

And if futures are any indicator, US and European markets are also looking at selling pressure when the opening bell sounds later today.

THE CLOSING BELL-

The EGX30 rose 0.9% at today’s close on turnover of EGP 5.2 bn (17% above the 90-day average). Local investors were net buyers. The index is up 10.5% YTD.

In the green: Juhayna (+6.5%), Beltone Holding (+5.2%), and Palm Hills Development (+4.9%).

In the red: GB Corp (-2.0%), Mopco (-1.6%), and Talaat Moustafa Group (-1.2%).