12/05/23

UK: Wealth tax of 0.5% could cover share of loss and damage fund, says charity.

As published on theguardian.com, Friday 12 May, 2023.

A tax on wealthy Britons of just 0.5% could more than meet the UK’s entire “fair share” contribution to the international loss and damage fund established to support countries worst hit by global climate breakdown, a charity has suggested.

Taxing 5p of every £10 of individuals’ wealth over £1m would raise £15bn a year by 2030, well in excess of an estimated $15bn (£12bn) UK contribution to the new fund, according to an analysis by the anti-poverty campaigners Christian Aid.

The loss and damage fund, established at last year’s Cop27 climate summit in Egypt, is intended to provide compensation for climate-related disasters that are beyond the possibility of adaptation.

Sought by developing countries since 1992, the fund was the most contentious issue at the UN conference, and many of its specifics are yet to be ironed out.

Estimates of its potential cost differ, but the range of $290bn-$580bn a year by 2030 is often cited, with a midpoint of about $400bn, taking into account inflation and rising climate impacts. Christian Aid estimates the UK’s “fair share” of this to be about 3.5%, or $15bn.

The charity says a wealth tax of the kind envisaged in its report would affect the top 5% of households, with the burden disproportionately borne by the top 1%. “This has the advantage of being levied on those who are likely to be disproportionately high polluters in their consumption and personal investment,” the report says.

The entire sum could also be raised through a tax of up to 95% on the excess profits of fossil fuel companies, which are enjoying all-time record surpluses, the report suggests. Or the money could be raised through a combination of measures including air passenger levies, emissions trading schemes and an expanded financial transactions tax, according to the report.

Nushrat Rahman Chowdhury, Christian Aid’s climate justice policy adviser, who wrote the report, said: “Climate change is the biggest issue of global injustice facing the world today. Some of the people that have done the least to cause it are experiencing the most terrible consequences. How we address that injustice fairly is at the heart of international climate negotiations.”

No country has yet agreed how much they will contribute towards the loss and damage fund. Chowdhury’s report recommends that richer countries should use progressive taxation to raise the cash, and communicate the need for it in the context of the growing climate emergency.

Liane Schalatek, an associate director of the Heinrich Böll Stiftung Foundation, said: “This study clearly highlights the potential of progressive taxation for generating new and additional funding to support developing countries and the most vulnerable people in addressing loss and damage.

“Rich countries, in fulfilling their moral obligation and historical responsibility, can build on approaches that many already have in taxing wealth, financial transactions or harmful environmental impacts. It is technically feasible and should be pursued as a matter of political priority.”