EUROPEAN COMMISSION - REVENUES OF UP TO €2.1 billion PER YEAR FOR CYPRUS FROM TAX ON THE SUPER-RICH - Filenews 22/4 by Theano Thiopoulou
Wealth inequality in Cyprus is growing, with the result that the rich are getting richer and a larger part of the wealth is passing into the hands of the richest households.
The European Commission's recent study "Wealth Taxation, Including Net Wealth, Capital and Exit Taxes", 327 pages, records that wealth inequality is increasing in a number of member states and that the current tax architecture is unable to keep up with developments.
In Cyprus, this picture is even more stark, as the richest 10% of households recorded one of the largest increases in wealth concentration in the EU, now holding 67% of total wealth.
More specifically, according to the report's data, in Southern European countries such as Cyprus, the richest 10% of households own (2023 data) 67% of the total national wealth, a percentage increased by 13% compared to 2007.
In Greece, the richest 10% of households own (2023 data) 61% of the total national wealth, a percentage increased by eleven points compared to 2007.
For the rest of the countries that show an increase, the data are: Slovenia (57.2%, +9.2 percentage points), Malta (53.6%, +9.4 percentage points), Portugal (60.2%, +1.2 percentage points), Spain (57.2%, +1.1 percentage points), Italy (56.1%, +1 percentage point).
According to the European Commission's report, most central and eastern EU member states experienced increases in wealth shares for the richest 10% of households, while several countries in northern and western Europe showed decreases or no changes at all, with the notable exception of Sweden, where the share increased by 7.2 percentage points since 2007.
Potential revenue
The Commission's study is proceeding with estimates of potential revenues from a coordinated European wealth tax, of the Zikman type. Gabriel Zikmán is a French economist who promotes the idea of additional taxation on the super-rich, and the issue was put on the agenda of the G20 under the presidency of Brazil, with a provision for an annual tax rate of 2% on the net worth of those over €100 million.
Zikman estimates that such a minimum taxation would generate more than 200 billion dollars worldwide.per year, while it derives legitimacy from the logic of the global minimum corporate tax of 15% already applied in more than 130 countries.
In many ways, the report says, the proposal has become the starting point for discussions on the feasibility and design of such a tax. In the report there is a table entitled "Estimated revenue from an EU-wide net wealth tax on UHNWIs", which records the potential revenues for each state.
Indicatively, we mention two examples:
- -At a rate of 2%, Cyprus could receive €1.2 billion annually, of which €800 million by billionaires. At a rate of 3%, according to the European Commission, Cyprus could receive €2.1 billion, of which €1.2 billion would be from billionaires.
- -At a rate of 2%, Greece could receive €1 billion per year, of which €700 million by billionaires. At a rate of 3%, total revenues would amount to €1.9 billion.
- -The corresponding amounts for France reach €19.4 billion at a rate of 2% and €34.8 billion at a rate of 3%, for Germany €16.9 billion and €30.4 billion respectively for Italy €8.3 billion and €15 billion.
Intervention by AKEL on inequality
On the occasion of the Commission's report, AKEL states in a statement that the EU report on "wealth taxation confirms the ever-increasing concentration of wealth in the hands of the few. In Cyprus, this picture is even more stark, as the richest 10% recorded one of the largest increases in wealth concentration in the EU, now holding 67% of total wealth."
At a time, he notes, "when the government brags about surpluses and positive indicators, it ignores the reality experienced by the vast majority of society: income and social inequalities are intensifying, while wealth is accumulating in the few. This situation is not accidental. It is a structural problem of the Cypriot economy, which was consolidated through the policies of the Anastasiades-DISY and Christodoulidis governments, which provide generous support to the banks and big interests. When it comes to real support for society, then they invoke fiscal discipline."
