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 for reducing inequalities”. […]strengthen the viability of public accounts and promote sustainable, balanced and inclusive growth,” according to the latest declaration by G20 finance ministers and central bank governors, published last Thursday.
All the countries in this forum which brings together the main world economies have signed this text, even the representative of the Argentine government, chaired by the ultraliberal Javier Milei and who had been speculated to be able to block it. A permanent threat (also from the United States and other countries) because the declaration includes two progressive and historical objectives, which seek greater social justice. On the one hand, the intention to continue to “work together […] regarding effective taxation, including that of wealthy individuals. That is to say in the design of a global and coordinated tax on the super-rich, as already advanced in the historic agreement concluded in July in the same context of the G20, thanks to the leadership of the Brazilian presidency.
On the other hand, the press release emphasizes that we must continue 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, put in place a minimum tax on the profits of multinationals, to prevent them from taking advantage of the “loopholes” of tax havens and the corporate tax itself.
The statement coincided with the International Monetary Fund’s (IMF) fall report on the European region, which supports “structural tax reforms” that raise taxes on the wealthy and corporations, the briefing explains. In the same spirit, the BRICS summit (the forum which brings together Brazil, Russia, India, China and South Africa) published a press release adding the initiative of “international cooperation” for a more “progressive and efficient” taxation. , more precisely, on the super-rich.
All these steps must be finalized during the G20 summit which will be held on November 18 and 19, still in Brazil, and at which Spain will be present 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 about which, initially, it was ruled out that they would include the definitive development of the minimum type 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 profits that these sectors obtained thanks to the rise in interest rates and the inflation crisis.
Currently, these taxes are pending, as recognized 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 , during the press conference which followed the Council of Ministers. The reason is that two of its main partners in Congress have threatened to break up the investiture bloc again, the PNV and the Junts. The two groups are aligned with the interests of Repsol or Cepsa. These companies have a significant weight in the industrial fabric and employment in Euskadi and Catalonia, bases of the electorates of the nationalist parties respectively, and in other regions.
In Tarragona, the first multinational has not yet confirmed an investment of 1.1 billion euros in a pioneering project to convert urban waste into fuel that it has suggested transporting to Portugal. On Friday, Cepsa joined this “campaign”. Spain’s second largest oil company, controlled by the emirate of Abu Dhabi, has paralyzed 3 billion investments in the so-called Andalusian hydrogen valley until the government clarifies whether it will maintain or not and how the tax on energy companies.
However, despite this “hostile” context and parliamentary weakness, the “structural tax reform” recommended by the IMF or the measures discussed at the G20 are a path on which the Spanish government is committed with the European Commission. In fact, it is the main way to comply with the EU’s new fiscal rules, which require reducing budgetary 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 on the rise
Taxes on banks and energy companies ‘part of government deal’ [entre PSOE y Sumar]“But we are aware that to be applied, they must go through Congress, which requires a parliamentary majority and we are at this point in the process of building this agreement around these two figures,” Carlos Corpus underlined on Tuesday.
“The implementation of these two taxes has been balanced. In two senses. “This made it possible to make a fair contribution from these two compatible sectors in a period of rising prices – therefore it made it possible to finance the social shield that we put on the table for families – with the best results in its history . Finally, “this coincided with a record arrival of investments, in sectors such as renewable energies,” commented the Minister of the Economy.
“This element of balance must be the starting point of the discussion on the permanence of these taxes. In addition, other elements of economic policy must be evaluated, which do not only concern an emergency response”, such as that occurring in 2022. “In the energy field, for example, it is important to maintain an effort to high investment. . 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.
Shortly before, after announcing (still) record profits, the CEO of Banco Santander, Héctor Grisi, had warned that “of course we do not consider it a good thing that they leave this permanently”. [el gravamen a las entidades financieras]”. As he put it: “It hurts growth, it discriminates, it puts us at a disadvantage compared to other countries. It’s an income tax, it’s poorly structured. If they start on these same bases, it is completely false. In a bad cycle, this will hit us because it can generate 50 billion less credits. “We don’t see any other country increasing it beyond 2024.”
Last week, in an article in La Vanguardia entitled Industry or populismthe CEO of Repsol, Josu Jon Imaz, assured that the special tax on banks and energy companies are “populist measures” as part of a strategy of “lack of social recognition of the value of the company, overlaps regulations, stifling of the industry, bans”. instead of stifling incentives and tax measures that penalize the creation of wealth and jobs” which, “under the mantra of social protection, seriously compromise the future model of this country”.
Nobel Prize winner in economics supports greater tax progressivity
Contrary to these messages, high-level international economic thinking follows the trend of debates towards more progressive taxation from the G20 or the IMF. The Turkish Daron Acemoglu, in his first article published in Spain after receiving the Nobel Prize for Economics in mid-October, headlined “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 to 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 didn’t earn what they earn today. Part of it has to do with technology – today everyone can see James thanks to television and digital media – part of it has to do with standards – paying hundreds of millions of dollars to cultural superstars has become more acceptable – and in part with “Separate from taxes – if the United States would still have 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 favorite candidate win. » The prestigious journal specializing in economic information states that “billionaires contributed 18% to the total campaign spending of candidates Kamala Harris and Donald Trump”.
“American billionaires make up 0.0005% of the population, account for 5% of total wealth and financed a third of Republican Trump’s campaign. The triumph of plutocracy, in real time,” laments economist Gabriel Zucman, who signed the proposal for a 2% tax on the wealth of billionaires around the world, debated at the G20 forum and who obtained “support » history from the population. all countries in summer.
In recent days, as a highlight, the French Assembly has begun the development of a “tax on billionaires”. A common sense measure, the effect of which would be truly modest: guaranteeing that the richest do not pay less taxes than the middle classes, as is the case today,” concludes Zucman.
