Europe’s socialists want a rich tax and a ‘responsible capitalism’ law

Europe’s group of socialist MEPs have called for a wholesale reform of global taxation rules if the world is to finance its adaptation to the climate crisis and the ravaging effects of capitalism.

S&D president Iratxe Garcia Perez presented the report ‘The Great Shift’, a document that is billed as providing “game-changing policy proposals to transform a broken world into sustainable well-being.”

The report proposes an EU net wealth tax that ensures the wealthiest households in the EU contribute to the financing of policies that foster sustainability and well-being.

“Current levels of green and social investment are far from what is needed to make possible the transition to a carbon-neutral economic model and a society without poverty. Public budgets are eternally tight and public debt is piling up while, at the same time, 25% of private wealth in the EU is held by only 1% of the population,” said S&D vice-president Eric Andrieu.

“Research shows how the modest and progressive taxation of this richest part of the population could generate startling amounts of tax revenue – in excess of 4% of EU GDP annually – that could help make society fairer and more sustainable for everyone. Building on this evidence, the report advocates the introduction of an EU net wealth tax.

“The EU must move to the direction of the OECD on company taxation. Companies must take on their responsibility and our politicians must be vigilant on social and environmental control of companies,” Andreiu said.

The report also proposes a European Responsable Capitalism Act, a new, binding framework for corporate responsibility that leads companies to internalise essential social and sustainability objectives, makes corporate governance more transparent and democratic, and erects backstops against excessive short-termism and failed ideas of shareholder value maximisation.

“This is a roadmap for the great shift… the only way we can have a holistic vision with specific proposals to head into a more sustainable, fairer society with more human solidarity… we need to adapt capitalism to this world,” Garcia Perez said.

“We say capitalism has become an unfair economic paradigm… can we accept that The world’s richest 1 percent, those with more than $1 million, own 44 percent of the world’s wealth?” MEP Andrieu asked in his opener on the report.

“The most critical message of this policy report is that progressives must build a new alliance between ecological and social progress. The fight for the environment and the fight for a more equal and fair society are part of the same battle.”

Among ‘The Great Shift’’s most game-changing recommendations are: a fundamental reform of public policy at national and European levels in the economic, social and ecological spheres by anchoring policy-making and public budgeting to essential well-being goals, instead of GDP;

A change of gear at European level in defining legally binding sustainable goals, rules and norms to change the basic terms on which our economic system operates, including a European Responsible Capitalism Act, an EU-wide Anti-Poverty Law, and a Biodiversity Law;

A change of gear at global level with regard to multinational companies through a legally binding United Nations Convention on Social Responsibility;

And a reform of national social welfare systems into a new generation of socio-ecological welfare systems, in order to protect citizens from future climate change consequences in material and health terms.