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WHAT CAN BE DONE
Alternative proposals that are pushing governments and institutions to
go further are also being put on the table. The IMF has recently looked at
‘worldwide unitary taxation’, an alternative tax method promoted by academics
and some civil society organizations to ensure that companies pay tax where
economic activity takes place. 406 Ten EU countries have agreed to work together
to put a Financial Transaction Tax in place, which if applied to a broad range of
transactions, could dampen speculative trading and raise €30–35bn per year. 407
The debate around global and national wealth taxes has been brought to
popular attention by Thomas Piketty’s book Capital in the Twenty-First Century,
where he proposes a global wealth tax to curb excessive wealth inequality.
He proposes a sliding scale starting at 0.1 percent for those with fortunes of
less than €1m, moving up to 10 percent for those with ‘several hundred million
or several billion euros’. 408
The idea of wealth taxes was also proposed to the Brazilian congress in 2013
by the Brazilian ruling party in the wake of riots. 409 In 2012, it was reported
that the IMF was considering a one-time 10 percent wealth levy, in order to
return many European countries to pre-crisis public debt-to-GDP ratios, but
its support for the proposal was quickly denied. 410 The economic and financial
crises, and Capital in the Twenty-First Century, have undoubtedly started a
serious debate about taxing wealth to tackle economic inequality. Oxfam has
calculated that a tax of 1.5 percent on the wealth of the world’s billionaires
today could raise $74bn. This would be enough to fill the annual gaps in funding
needed to get every child into school and deliver health services in the poorest
49 countries. 411
More than numbers: Tax is about our model of society
‘How people are taxed, who is taxed and what is taxed tell more about
a society than anything else.’
Charles Adams 412
Taxes are essential sources of revenue to fund the services, infrastructure,
and ‘public goods’ that benefit us all, and can be the glue between citizen
and state. Governments must rebuild trust in the tax system, and demonstrate
that when tax and public spending are done right, they can form the fabric of
a decent and fair society, and deliver for everyone fairly.
Reforms in Lagos State, Nigeria have demonstrated that the vicious cycle of
mistrust towards governments can be stopped. Since coming to power in May
2007, Governor Babatunde Fashola has invested in roads and education, and
communicated to the 15 million inhabitants that those public services were
financed by taxes. Fashola has remained highly popular and was re-elected in
2011 with a large majority. In 2011, an impressive 74 percent of Lagosians were
satisfied with the way that Governor Fashola has spent their tax money so far.
This shows that, although the willingness of the public to pay taxes is low in
many developing countries where governments are typically viewed as wasteful
and corrupt, willingness can be rapidly generated by effective fiscal reforms. 413
These are signs of hope for the future. But, as ever, turning rhetoric and debate
into action will require sufficient political mobilization to oblige governments to
stand in solidarity with the 99 percent, and against the special interests that
resist reform.
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