The promoters had to collect one million signatures across Europe by October 9th.
Several dozens of organisations from all over Europe have joined forces to promote a European Citizens’ Initiative (ECI) with the aim of establishing a tax on large fortunes. In Catalonia, the Platform for Fair Taxation, which includes the trade unions CCOO and UGT, is collecting signatures for the Tax the rich initiative to become a reality. It is the first initiative to push for Europe-wide taxation of wealth. In order to do so, the promoters had to collect one million signatures across Europe by 9 October, of which a minimum of 41,595 had to come from Spain. The initiative seeks to establish a tax on large fortunes that would serve to reinforce the fight against poverty, economic and social inequalities and generate resources to finance measures against climate change.
Precisely, the trade unions and other members of the platform met at the Barcelona Stock Exchange on 16 September to make their tax proposal visible. They denounce that a large number of millionaires pay very low taxes (between 0% and 0.5% of their assets). In Spain, offshore financial wealth, that is, that which is sent outside the country to tax shelters, has increased by 75.8% in 20 years and has gone from 89,000 million euros in 2001 to 156,000 million in 2022.
What is a European Citizens’ Initiative?
In Europe, there is the European Citizens’ Initiative, an instrument of participatory democracy, incorporated in the Treaty of Lisbon, which allows citizens to present legislative proposals if a minimum number of support is achieved. The European Commission then has the power to decide whether to take it into consideration and legislate on it.
Three tax proposals
The ECI proposes that only the wealthiest individuals should be taxed. They quote the example of a proposal by Oxfam, which calls for tax rates of 2% of wealth on net wealth above 4.6 million euros; 3% on net wealth of individuals with more than 45.7 million euros and 5% on net wealth above 913 million euros. This could raise as much as 286.5 billion euros across the EU.
Another proposal is that of the economists Saez, G. Zucman and C. Landais from 2020 to tackle the pandemic. They considered taxing only the richest 1% of European citizens who have 22.5% of the wealth of the entire EU. The economists propose that people with more than 2 million euros pay a progressive tax starting at 1% from 2 million euros and up to 3% from 1 billion euros. The estimated revenue from this proposal is 150 billion euros, equivalent to 1.05% of GDP as a whole.
The latest proposal has been promoted by the Green group in the European Parliament and developed by the Tax Justice Network. The wealth tax would be levied on the top 0.5% of the richest people in the Union with different tax rates depending on the wealth threshold. A 1.7% tax is proposed for wealth above the richest 0.5%, 2.1% for those between 0.1% and 0.05%, and 3.5% for wealth above the richest 0.05%. The revenue for the European Union could reach 213 billion euros per year, although taking into account possible losses due to the migration of large fortunes, the revenue would be reduced to 208 billion euros. In addition, the possibility of increasing the tax’s progressivity is being considered, extending the brackets or combining the wealth tax with the capital gains tax.
The organisations stress the importance of making the tax as simple as possible to prevent the owners of large fortunes from avoiding paying it. For this reason, they call for greater international cooperation in tax matters and the establishment of a global register of financial assets to avoid the concealment of wealth and capital in tax havens. They call for global taxation on a residence basis, so that assets held worldwide by taxpayers with tax residence in any European country are included in the tax base. They also opt for strict taxation mechanisms in case of exit or ‘tax expatriation’.
The Spanish case
In Spain there is a temporary tax on large fortunes that is in line with the global agreement to establish a minimum rate of 15% on the profits of large multinationals. Tax coordination at the European level would allow for a minimum level of taxation of large fortunes.
In response to the financial crisis, Spain introduced the Wealth Tax for individuals in 2011, initially as a temporary measure but still in force. In 2021, it became a permanent tax, applicable at national level but devolved to the Autonomous Communities, which can modify it and apply deductions. This situation has caused a ‘race to the bottom’ in some regions such as Madrid and Andalusia, benefiting the wealthy.
At state level, the tax has an exemption of 300,000 euros for the main residence and a minimum exemption of 700,000 euros. Those with assets of more than 2 million euros are obliged to declare it. The tax rate is progressive, between 0.2% and 3.5%, depending on the taxable base. In 2021, this tax collected more than €1.3 billion on declared wealth of €847 billion, with an effective rate of 0.16%.
In 2022, the Temporary Solidarity Tax on Major Fortunes was approved for estates exceeding €3 million, as a complementary measure to curb tax competition between regions. This tax raised 623 million euros last year, from 12,000 taxpayers, mostly from Autonomous Communities that subsidise Wealth Tax.
In the EU, according to the 2022 Eurobarometer, 67% of European citizens are in favour of a higher tax burden on the richest to finance measures to support the poorest groups of the population. In Spain, according to a 2021 survey commissioned by the billionaires’ network Millionaires for Humanity and carried out by the research company Glocalities, 6 out of 10 Spaniards are in favour of a temporary additional tax on the rich to deal with the consequences of the pandemic like the one currently in force.
About some successful ECIs
Right2Water, the first successful European Citizens’ Initiative (ECI), was launched in 2013 with the aim of ensuring that all EU citizens have access to safe drinking water and sanitation, treating water as a public good rather than a commercial commodity. The initiative gathered more than 1.6 million signatures, which led the European Commission to review the legislation on access to drinking water. End the Cage Age, focused on eliminating the use of cages in intensive livestock farming, also surpassed 1 million signatures, prompting the Commission to announce a proposal to gradually ban the use of cages in animal husbandry. Ban Glyphosate, which called for a ban on the herbicide glyphosate and the promotion of more sustainable farming practices, failed to achieve a total ban, but prompted the Commission to take steps to reduce its use and increase transparency in pesticide risk assessment.
