The G20 summit in Rio aims to build consensus on taxing the super-rich for climate action and poverty relief. But as geopolitical issues take priority, President Lula may struggle to quell skepticism over the proposal.

Brazilian President Luiz Inacio Lula da Silva, hosting the G20 summit in Rio de Janeiro from Monday, will try to progress plans to tax the world’s richest billionaires, who often use complex loopholes to avoid tax.

At a July meeting of G20 finance ministers in Rio, the world’s wealthiest nations agreed to start a “dialogue on fair and progressive taxation, including of ultra-high-net-worth individuals,” despite fierce resistance from the United States and within Germany’s now collapsed coalition government.

While the world’s growing geopolitical issues — the Ukraine and Gaza conflicts, the prospect of a second Trump term in the US and China trade — are expected to dominate the two-day summit, Lula hopes to move the wealth tax plan forward as the money raised from billionaires will help boost other pressing global issues.

Campaigners have called for years for greater scrutiny over how the wealthy avoid taxes
© Fabrice Coffrini/AFP

Advocates say new tax would cause little pain

Devised by French economist Gabriel Zucman, the plan would introduce an annual tax of 2% on the total net worth of the uberwealthy — not just their annual income. This would include real estate assets, corporate shareholdings and other investments. Zucman estimates that the top 0.01% of the population pay an effective tax rate of just 0.3% of their wealth.

The new levy could raise up to $250 billion (€237 billion) a year from the nearly 2,800 billionaires globally, who have a combined net worth estimated at some $13.5 trillion, according to the Forbes Richest World’s Billionaires List. The funds raised would be used to tackle growing global inequalities, especially among heavily indebted low-income countries, including many in Africa.

“The taxation of high net-worth individuals is very important as it could be a source for funding initiatives that fight hunger and poverty, and also tackle climate change,” Tomas Marques, a research fellow at Hamburg’s GIGA Institute for Latin American Studies, told DW.

Developing nations, who many scientists say are being disproportionately affected by climate change, have for years demanded funding to offset its worst impacts. Success stories include World Bank and Green Climate Fund support for India’s bid to boost solar power capacity and Brazil’s Amazon Fund, aimed at reducing deforestation, which is part-funded by Norway and Germany.

Skepticism over G20 spending plans

While there may be broad public support for new taxes on the ultra-wealthy, the rise of national populism in many G20 countries is increasing scrutiny about how public money is spent, amid concerns that international aid and development funds could be better deployed at home.

“Most of the G20 countries are having a hard time balancing their budgets,” Maria Antonieta Del Tedesco Lins, an economist and associate professor at the University of Sao Paulo, told DW. “While extra taxes would help, it’s very hard to juggle national pressures with new international or multilateral obligations.”

Monday’s opening ceremony in Rio will launch the Global Alliance Against Hunger and Poverty, an initiative under Brazil’s G20 presidency that seeks to accelerate efforts in the fight against poverty and a lack of food by 2030.

The Brazilian government is also the principal backer of the proposed tax on the ultrawealthy, along with France, Spain and South Africa. Despite this support, the lower house of Brazil’s parliament, the Chamber of Deputies, last month rejected plans for an additional domestic levy on those with large fortunes.

“It’s a shame because Brazil could benefit a lot [from this tax] because we are a very unequal country. If there was an international consensus [on taxing the superrich] it could help negotiations in the Brazilian Congress,” said Lins, who took part in a G20 academic engagement group ahead of the summit.

In Brazil, as in the rest of the world, the wealthy often shield their wealth from tax authorities by creating shell companies in countries with low or zero taxes, taking advantage of banking secrecy laws and forming trusts and charitable foundations, which offer generous tax breaks.

US spurns wealth-tax proposal

While China’s and India’s positions on the new tax are ambiguous, Washington remains firmly opposed. US Treasury Secretary Janet Yellen told the Wall Street Journal in May that the measure was “something we can’t sign on to.”

President-elect Donald Trump has yet to comment on the proposal but is unlikely to back hiking taxes on the uber-rich. His first term was marked by large tax cuts — which benefited wealthy individuals and corporations the most. But during his short-lived run for the White House in 2000, he did promise to cut the national debt by levying a one-time 14.25% tax on the wealthy.

Lula then faces tough odds in making any meaningful progress during the two-day summit, especially as many critical geopolitical issues, as well as Brazil’s proposal to improve global governance will also dominate the talks.

“Lula is a great negotiator,” Marques said. “He bills himself as a bridge builder between the Global South and Global North. But I don’t know how he can reach a consensus around this very sensitive topic.”

Brazilian President Luiz Inacio Lula da Silva is a shrewed negotiator, who is determined to push ahead with higher taxes on billionaires
© Erica Martin/TheNEWS2/picture alliance

Wealth tax — a boon for Africa

Better representation at G20 for Africa is now critical, as the continent seeks to benefit from any new tax plan, through the receipt of poverty and climate alleviation funds. The African Union, the regional bloc of 55 African countries, will be attending the Rio summit for the first time, after being admitted as a full G20 member in August.

Next year, South Africa will take over the rotating G20 presidency — the fourth consecutive leadership of the bloc from the Global South, after Indonesia, India, and Brazil. The role will give the country and Africa as a whole further opportunities to shape global policies and advocate for the continent’s interests.

“African countries have been underrepresented in the G20 despite the continent’s importance globally,” Marques, who is in Rio for the summit, told DW. “But things are changing, and the African Union is now starting to have some influence on policymaking.”

Edited by: Uwe Hessler

Author: Nik Martin

Argentina’s courts have ordered the arrest of 61 Brazilians facing jail sentences for their involvement in the Brasilia riots last year.

In January 2023, supporters of Brazil’s former far-right president Jair Bolsonaro stormed Congress in an attempted overthrow of the new left-wing government led by Luiz Inácio Lula da Silva, commonly known as Lula.

Hundreds of the rioters were arrested, charged and released on bail. Some were convicted and sentenced.

But others fled to Argentina to escape their sentences – particularly after far-right politician Javier Milei was elected president in December 2023.

Judge Daniel Rafecas said the warrants would apply to those who had “convictions with definite prison sentences,” Brazilian news outlet Globo reported.

In June this year, Brazilian authorities issued an extradition request to Argentina seeking help in extraditing more than 140 prosecuted rioters. But many in Brazil questioned whether the Milei government would agree. The Argentine president is a friend of Bolsanaro’s and has been a staunch critic of Lula.

However, in October, Argentina cancelled political asylum for people who have been convicted of crimes in their home country.

And on Friday, an Argentinian Federal Court judge ruled that the arrest warrants should be issued, noting the request of Brazil’s supreme court.

Local media also reported that local police on Friday had arrested one fugitive in La Plata city, about 60km (37 miles) from the Argentine capital Buenos Aires.

It is unclear if the whereabouts of the other rioters are known.

The Brazilian government believes the January 2023 riots were part of a coup attempt orchestrated by Bolsonaro following his defeat in a tightly contested presidential election the previous October. He denies any involvement.

But in the weeks following the election, he made repeated claims on social media questioning the results of the vote and the integrity of Brazil’s electronic voting system.

Less than a week after Lula was inaugurated in January 2023, thousands of Bolsonaro supporters stormed the Congress building, the Supreme Court and Presidential Palace in Brasília.

The arrest warrants come just two days after another attack in Brasilia’s Three Powers Plaza, where a former political candidate committed a suicide bomb attack outside the Supreme Court.

Police have named the man as Francisco Wanderley Luiz, who stood unsuccessfully in council elections for Bolsonaro’s Liberal Party.

Story by Mitchell Labiak and Faisal Islam – Business reporter and economics editor, BBC News

The UK must “rebuild relations” with the EU “while respecting the decision of the British people” who voted to leave in 2016, the Bank of England’s governor will say later.

Andrew Bailey’s Mansion House speech to investors will mark some of his strongest comments yet on Brexit, saying one of its consequences has been weaker trade.

He has previously avoided commenting on the topic because of the Bank’s independence from Westminster politics.

“As a public official, I take no position on Brexit per se,” he will say. “But I do have to point out consequences.”

Mr Bailey will say the changed relationship with the EU has “weighed” on the economy.

“The impact on trade seems to be more in goods than services… But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people.”

Mr Bailey will also say the UK should not focus “just on the effects of Brexit”, warning about the “broader fragmentation of the global economy”.

His Brexit comments go much further than he previously has on the topic. Last November, he said the decision had “led to a reduction in the openness of the UK economy”.

Assessing the impact of the UK’s decision to leave the EU on the economy has been tricky given the multiple economic shocks in recent years.

The Office for Budget Responsibility and other independent analysts estimate the economy is 4% smaller over the past 15 years as a result.

Goods trade, especially in food and farm exports, has been especially hit by the imposition of new trade barriers. Trade in services, such as banking, has done better than expected, however.

The government remains opposed to rejoining the EU, but Prime Minister Keir Starmer and some EU politicians have said there could be a better relationship.

Spain’s Finance Minister Carlos Cuerpo told the BBC: “We need to be positive here and optimistic that a better deal can be actually closed on that front.”

A UK government spokesperson said: “We are committed to resetting our relationship with our European partners… and improving our trade and investment relationship.”

Mr Bailey’s Mansion House address will come alongside a speech by Chancellor Rachel Reeves, who will talk about her plans to shake up the UK pension system in a bid for growth.

She wants council pension pots to be merged so they can make bigger investments to generate higher returns, a move criticised as risky by some.

“The UK has been regulating for risk, but not regulating for growth,” she will say.

The annual event comes as the government also faces criticism from businesses for holding back growth through tax raises, which Reeves has said are necessary to “properly fund” public services.

‘Bottom line’

Mr Bailey’s speech will go on to address the wider UK economy and its lack of growth.

“Bottom line, it’s not a good story,” he will say, describing how productivity has fallen since the 2008 economic crash and has not recovered since.

He will explain that the UK is not alone in having this problem, which he says also affects other parts of Europe, but notes that the US has “a better story to tell”.

Mr Bailey will also echo Reeves’ concern that the UK pension system is “fragmented” and requires “heavy lifting” to fix it.

Former Chancellor Jeremy Hunt has said there was “much to welcome” in Reeves’ suggested reforms, though shadow chancellor Mel Stride has added that Conservatives will be “looking closely at the detail”.