Small tax on the super-rich could bring in billions for the Caucasus, Central Asia

A recent study published by an advocacy group finds that imposing a modest tax on top earners could generate hundreds of millions of dollars in much-needed revenue for countries in the Caucasus and Central Asia. The additional revenue could go a long way in addressing the social and economic challenges of global warming and climate change, the study adds.

The working paper, titled Taxing extreme wealth: What countries around the world could gain from progressive wealth taxesargues that a relatively small tax paid by the top 0.5 percent of earners in every country on the globe could collectively raise more than $2 trillion. The paper, published by the UK-based Tax Justice Network (TJN), uses the example of Spain’s 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 come with substantial financial needs,” the report said. “A moderate, progressive tax could help countries raise these urgently needed funds. The proposed tax would seek a reasonable contribution from the richest 0.5% in each country, who on average hold more than 25% of a society’s total wealth.”

Under the TJN plan, the super-rich in each nation would pay wealth taxes above a predetermined threshold, calculated on a sliding scale ranging from 1.7 percent to 3.5 percent. The plan sets a high net worth threshold to ensure the middle class isn’t penalized by the tax.

According to the working paper’s estimates, the wealthier states of the Caucasus and Central Asia could collect hundreds of millions of dollars in additional revenue. In Kazakhstan, the wealthiest state in the two regions, more than 61,000 citizens would be eligible to pay wealth tax. The minimum asset threshold for those facing tax in Kazakhstan would be $819,381. The TJN estimate, adjusted for existing taxes and other factors, indicates that the proposed wealth tax could generate an additional $3.7 billion in revenue for the Kazakh government. These funds could have been useful in speeding up recovery efforts for areas of Kazakhstan that were devastated by this spring’s floods. Residents in at least one badly affected area staged protests in May over what they claimed was inadequate government assistance.

Elsewhere, the introduction of the TJN plan could generate about $695 million in additional revenue for the Uzbek government, which has increased. large deficits lately, as it strives to renew the country’s economy. According to the TJN formula, the richest state in the Caucasus, Azerbaijan, could add more than 241 million dollars to the state coffers. The poorest nation in the two regions, Tajikistan, could generate about $54 million.

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

TJN does not outline an action plan to ensure international adoption of its super-rich tax proposal. For the proposal to work, strict international transparency rules would need to be introduced, the report acknowledges, which calls for the creation of a Global Asset Registry. The chances of such a mechanism appearing in the near future do not seem small.

“Existing tax systems provide opportunities for the super-rich to engage in international tax abuse, primarily through the use of secretive jurisdictions to protect their wealth,” the report said. “The implementation of a moderate, progressive wealth tax must therefore be accompanied by a move towards full beneficial ownership transparency for all types of companies and assets.”

Of Eurasianet.org

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