OWNIn the midst of the G20 meeting in South Africa, there was one word that haunted the delegation corridors: inequality. Behind the speeches about inclusion or the “reinvention of multilateralism”, discussions stumble over the same red lines – taxation of the very rich, access to financial information and the huge debt burdens in African countries’ budgets. Attiya Waris, a recognized global tax policy expert, critically observes South Africa’s “voluntary but isolated” presidency and a G20 that is “paralyzed by the coming Trump year”. For Le Point Afrique, he analyzes blind spots in the world economic order that major powers do not seem ready to reform.
Africa Points: Equality is one of the main themes of the G20. What has the South African presidency, ending with this summit, achieved to change course?
Attiya Waris: Progress has been made towards rebalancing in the G20 space. Brazil, India and South Africa have made great efforts to move forward together. The simple fact that the African Union is now a member of the G20, for example, is one of them.
But this is only small progress achieved with great difficulty. Unfortunately, I believe the global desire to create a more egalitarian space has not yet been realized.
This year, South Africa has done what it can to advance this debate, but European countries and other G20 members are busy looking for a way out in the current context of declining multilateralism, and are also wondering whether it is worth devoting time and energy to this debate as the United States prepares to take over the leadership of the G20. This will likely slow down negotiations considerably, as commitments made this year may no longer have value next year.
At the G20 meeting in Rio, leaders pledged to continue imposing taxes on the ultra-rich. A year later, it was clear that the files had barely changed. What for ?
No, I don’t think they really managed to put it on the agenda. And I think there will be strong opposition from the ultra-rich.
But we need to have very open and honest conversations because we are again in the midst of a global economic crisis. And this is a reality, many people have difficulty finding food.
Taxation of the rich is very important. However, I’ve noticed an inability to define what it means. We hear about the elite, the super-elite, the super-rich, and the ultra-rich. The vocabulary surrounding high net worth individuals is vast, but there is no clear definition. There is a lack of consensus regarding the definition of the term. And if we cannot reach a common understanding regarding a word or expression, we cannot, for example, make an agreement. We couldn’t even come to an agreement. How to tax unspecified persons? Who are we talking about? There should be a clear debate on this topic, but unfortunately I have not seen this happen so far at the G20.
We need to talk about taxation of the digital economy, all the new profits created thanks to innovative industries that are not taxed. This almost makes no sense, if you think about it. They benefit from subsidies and tax credits, and once established, they still do not contribute to taxes.
This is one of the conclusions of a report commissioned by the South African presidency and led by economist Joseph Stiglitz. The world’s richest 1% accumulated 41% of all new wealth created between 2000 and 2024. In the same period, only 1% of new wealth went to the poorest 50%. What do you think about this report?
I think that’s a good report. It highlights key issues. I hope this will be taken seriously and will result in discussion, but I do not anticipate any decisions at this time. I don’t really understand what will happen after this. It’s very unclear at the moment.
We also talked about establishing a group of international experts to move forward on inequality issues. I hope this will happen, but I haven’t seen it happen, and in my environment I haven’t heard back from any experts to call.
What could this group of experts change?
There are currently three major global financial problems: debt, taxation, and illicit financial flows. If we can create a truly multidisciplinary group of high-level experts, covering these three areas and focusing on the gaps, which are of paramount importance, then there is the possibility that, even in the absence of a global consensus or a G20 consensus, ideas will emerge and be taken seriously at national and regional levels. We can witness the beginning of a rapprochement between groups of countries to try to gradually repair this gap.
They may also require the establishment of a public database. This is important. The government lacks access to information, and the public does not know the ins and outs of the commitments made by the government. This is very worrying at a time when self-confidence is declining sharply.
For example, all debt agreements are private. Therefore, you will know the amount of debt and the interest rate. But you will often ignore the terms and conditions. However, many of these modalities currently include a tax component. This means that the tax policy of the debtor country is now under the control of the creditor. So, if you want to raise income tax, we might suggest you just raise VAT. The IMF, for example, is known for its tendency to encourage VAT increases.
The issue of debt is very important, especially in southern countries. More than 40% of African countries currently spend more money on servicing their debt than on health. What are the issues at stake?
There are a lot of them. For example, when a new government comes to power, it often discovers debt agreements made by its predecessor. This situation caught countries off guard. Moreover, if the debt occurs before an election, it is sometimes used for political campaign purposes. The impact is debt mismanagement. However, the leaders who contracted him were not the ones who had to pay him back. So, the new government was in an impossible situation: It had to plan infrastructure development and start paying down debt, but the government no longer had the means. Thus, we find ourselves faced with a vicious circle that cannot be separated.
Moreover, the debt crisis has been exacerbated by the Covid-19 outbreak…
Yes, the COVID crisis has undeniably exacerbated the debt problem. This pandemic has changed all economic data, but debt and interest rates have not been frozen. As a result, the current analysis, loan and repayment schedules of countries no longer correspond to the actual economic situation.
As a result, contracted debt, which should stimulate growth and enable repayment, no longer fulfills that function. The result: we will cut social, health and education spending, which are always the first expenditure items sacrificed to pay off debt.
Right now, I’m not hearing any thoughts about the impact of Covid, and that really worries me.
How to get out of this vicious circle?
In 2000, we saw the elimination of more than $100 billion in international debt. I strongly believe in the need for debt relief, especially the debt of developing countries. The Vatican also supports this step. The Pope called for a jubilee year dedicated to the forgiveness of the debts of the Southern countries. This is one of the international calls to freeze and cancel debt. I also find the idea of selling some of the IMF’s gold reserves to cancel debt, especially debt of low-income countries, interesting.
But we can’t just cancel the debt and stop there. Instead, we should do what the United States did to Germany after the Second World War: freeze debt, then give the country a boost to get its economy back on track.
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Kangaroo today
Answer
We must ensure that these countries can collect revenues, give them some space and allow them to break the cycle, and get back in good shape before they get into new debt.
Despite the global economic crisis, I think it is very important now to spend money targeting the most disadvantaged groups in society. The working class is in a very difficult situation today. Least developed countries are in a disaster situation, as are small island developing states, which are at risk of sinking under the weight of climate change. It is important to consider this and humanize the debate.
