A recent study published by an advocacy group concludes that imposing a moderate tax on top earners could bring hundreds of millions of dollars in much-needed revenue to countries in the Caucasus and Central Asia. The additional revenue could go a long way in addressing the social and economic challenges associated with global warming and climate change, the study added.

The working paper entitled Taxing extreme wealth: Which countries around the world could benefit from progressive wealth taxesargues that a relatively small tax paid by the top 0.5 percent of income earners in every country in the world could raise more than $2 trillion in total. The paper, published by the UK-based Tax Justice Network (TJN), uses the example of the Spanish wealth tax as the basis for its global model of taxing the super-rich.

“Global challenges, particularly the climate crisis, inequality and the cost of living crisis, bring with them significant financial needs,” the report says. “A moderate, progressive wealth tax could help countries raise these much-needed funds. The proposed tax would require a fair contribution from the richest 0.5 percent of people in each country, who on average own more than 25 percent of a society’s total wealth.”

Under the TJN plan, the super-rich in all countries would pay taxes on wealth above a predetermined threshold, calculated on a sliding scale of 1.7 to 3.5 percent. The plan sets a high threshold for net worth to ensure that the middle class is not penalized by the tax.

According to the working paper’s estimates, wealthier states in the Caucasus and Central Asia could generate hundreds of millions of dollars in additional revenue. In Kazakhstan, the richest state in the two regions, over 61,000 citizens would be eligible to pay the wealth tax. The minimum wealth threshold for taxpayers in Kazakhstan would be $819,381. TJN’s estimate, adjusted for existing taxes and other factors, suggests that the proposed wealth tax could generate $3.7 billion in additional revenue for the Kazakh government. These funds could be useful in accelerating reconstruction efforts in areas of Kazakhstan devastated by floods this spring. Residents of at least one hard-hit area have Protests in May because of allegedly insufficient government support.

Elsewhere, the implementation of the TJN plan could generate additional revenues of around $695 million for the Uzbek government. major deficits lately as it tries to retool the country’s economy. Under the TJN formula, the richest state in the Caucasus, Azerbaijan, could add more than $241 million to its treasury. The poorest country in the two regions, Tajikistan, could bring in about $54 million.

The working paper argues that the super-rich should feel a moral obligation to help mitigate the effects of global warming. “The richest citizens bear more responsibility for carbon dioxide emissions, both because of their more excessive consumption and their investment habits,” the report says.

TJN does not provide an action plan to ensure international acceptance of its proposal to tax the super-rich. For the proposal to work, strict international transparency rules would need to be introduced, the report says, and calls for the creation of a global wealth registry. The chances of such a mechanism coming into being in the foreseeable future seem zero.

“Existing tax systems provide opportunities for the super-rich to commit international tax crimes, mainly by using secrecy systems to protect their wealth,” the report says. “Therefore, the introduction of a moderate, progressive wealth tax must be accompanied by a move towards full transparency of the beneficial ownership of all types of companies and assets.”

From Eurasianet.org

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