Wealth redistribution necessity to bridge inequality gaps
17 October 2023 |
4:12 am
Indication by the 2022 World Inequality Report to the effect that 50 per cent of the population owns only two per cent of total wealth clearly speaks to the urgency of pursuing an agenda of shared prosperity for a more secured future.
Indication by the 2022 World Inequality Report to the effect that 50 per cent of the population owns only two per cent of total wealth clearly speaks to the urgency of pursuing an agenda of shared prosperity for a more secured future. To this extent, the demand for proportionate wealth taxes payable by big corporate organisations and prosperous individuals would appear justified considering the growing population of global citizens threatened by inequality which manifests in multidimensional poverty with hunger and homelessness as most worrisome scenarios. More so, addressing socioeconomic inequality is not only critical to the development agenda of the 21st century but also germane to deploying lasting remedy to new frontiers of challenges around the climate change crisis and spiking wave of terrorism. Rightly so, advocacy for increase in wealth taxes thus became one of the highlights of stakeholders’ expectations ahead of the G20 meeting held in Delhi, India, earlier in September, with demands on leaders of emerging and developed economies to evolve a global consensus on wealth taxes by the super-rich.
It therefore came across as pleasantly reassuring that the global campaigns for increase in wealth taxes is led by a coalition of some 300 millionaires under the aegis of Patriotic Millionaires in partnership with the Institute for Policy Studies, Earth4All, Millionaires for Humanity and Oxfam. The coalition is supported by notable political actors including U.S. Senator Bernie Sanders, the former UN General Assembly President, Maria Espinosa, as well as a number of prominent economists. According to the campaigners, “the combined wealth of those with more than $50 million (£40 million) in assets has more than doubled to $11.8 trillion, and only four cents in every dollar of tax revenue comes from wealth taxes.” The group believes that increasing taxes payable by the wealthy would help curtail extreme wealth and mitigate inequality with attendant ramified consequences of deprivation projected to worsen with threats of climate crisis in the decades ahead.
It should serve as a wake-up call that the global campaign for increase in wealth taxes is coming at a time when most developing countries, including Nigeria, are yet to fully evolve tax policies to make citizens, particularly big players in the economy including the well-to-do in the society, fully obligated to payment of taxes. Unfortunately, the most prosperous in society with huge profits from business enterprises either indulge in wholesome tax evasion or fail to pay appropriate taxes. For some of the developing nations, therefore, the first hurdle is to put in place appropriate measures that would make tax evasion practically impossible and, by so doing, ensuring that the tax net captures all categories of taxable individuals and corporate entities. An effective policy with the best standard of implementation would therefore be an important prerequisite towards ensuring that tax assessment-related encumbrances, including double taxation, are eliminated from the system. While the demand for wealth taxes is desirable and has become more crucial than ever in the light of emerging realities, achieving the ultimate objective requires putting in place effective tax policy with implementation that is free from political manoeuvring. It should, however, be reiterated that obligation to tax payment including the proposed wealth taxes would derive approbation from government’s recognition of the rights of taxpayers and, in addition, active stakeholders’ engagement in demanding accountability and transparency from the system as a matter of collective citizens responsibility.
The global advocacy aimed at increasing wealth taxes in G20 countries, which comprise the G7 countries of developed economies, no doubt, aligns with the tax reform policies of most Third World countries including Nigeria; particularly in the light of acute revenue constraints that hinders development agenda. It is therefore a welcome development that the advocates are demanding “fairer taxation to address the cost of living and climate crises” and calling on governments to muster the right political will to evolve global agreement regarding wealth taxes. No doubt, wealth taxes would go a long way in helping developing and least developed nations grapple with the revenue shortages with much-needed resources to invest in human capital, which will translate into stimulating economic growth for sustainable development.
We share the sentiment of the advocates that by making the wealthy pay more taxes, the world could be spared the impending, and if not already unfolding dire consequences of sliding into “dangerous levels of inequality,” which imperils collective future. Nevertheless, it is most imperative to arrive at consensus on the benchmark for wealth taxes to determine the rate that is commensurate with profit margins in order not to jeopardise investment opportunities or inadvertently create incentives for tax evasion considering that the wealthy are powerful individuals who could bring their influence to bear on politics and policies; particularly in countries with weak tax laws and, by so doing, frustrate the worthy objectives. More important, however, is to ensure that enterprising citizens are encouraged with commensurate taxes rather than being discouraged by taxes that are disproportionate and discriminatory.
Fortunately, most countries of the global north would benefit significantly from increase in wealth taxes payable by multinational companies and their proprietors provided there is global consensus to make obligations enforceable across borders. It is indeed a welcome development that advocates for wealth taxes are predicating the demand on previous global cooperation which led to agreement on minimum level of taxes payable by multinational companies. There is, therefore, the need for a globally accepted standard to make the proposed increment in wealth taxes payable by multinational corporations and expatriates in countries of business operations and not only where the profits are domiciled. If the agenda is to address inequality, global consensus must take into consideration the interest of the host countries of business activities. The greater interest of humanity will be served if the agenda of wealth taxes is pursued as a global agenda aimed at curtailing growing socioeconomic deprivation.
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