Fossil fuel companies could be made to pay for their impact on the climate, and there’s talk of a global tax on the ultra-rich. These issues are up for discussion at the UN in New York, where countries are negotiating a new tax treaty aimed at holding polluters accountable.
Many developing nations feel the current proposals are too weak. They want stronger measures to ensure that the richer countries contribute more to climate actions. For example, earlier proposals to tax profits from fossil fuel companies have been watered down. There’s also a push for a registry to help tax wealthy individuals that didn’t make it into the draft.
Marlene Nembhard Parker, a delegate from Jamaica, emphasized the urgency of these discussions. She pointed out that recent climate disasters, like Hurricane Melissa, can devastate economies—wiping out a large portion of GDP in just one event. “To rebuild sustainably, we need clear agreements on environmental taxation,” she stated.
The draft treaty has been slow moving since it was first proposed by African nations in 2022. Notably, the U.S. has stepped back from these discussions. Meanwhile, some wealthy countries argue that tax talks belong in forums like the OECD, which mainly includes advanced economies.
If successful, this treaty could represent a significant advance in making fossil fuel companies pay for the damage they inflict. Currently, wealth inequality is stark; the richest 0.001%—about 56,000 people—control three times more wealth than half the world’s population.
Sergio Chapparo Hernandes from the Tax Justice Network views the upcoming negotiations as a crucial test. He says civil society is urging for policies that ensure polluters pay their fair share and that wealthier nations help reduce global inequalities.
Remarkably, countries are losing around $492 billion each year in taxes because multinational corporations exploit tax havens. Oil and gas companies have reaped massive profits in recent years, especially following spikes in prices due to geopolitical events like Russia’s invasion of Ukraine. Research shows that implementing a 20% surtax on the largest producers could have generated over $1 trillion in the past decade since the Paris climate agreement.
For nations most threatened by climate crisis, taxing the companies behind it is vital for climate justice. Tapugao Falefou, from Tuvalu, pointed out that the burden should fall on the biggest polluters, as they continue to accumulate wealth while vulnerable nations struggle.
Though some countries already impose taxes on fossil fuel consumption, only those hosting extractive industries can directly tax their exploitation, underscoring the need for a global framework. Concerns exist about scaring off the wealthy, but if many countries unite on essential wealth taxes, it could mitigate those fears. An annual tax of up to 5% on the ultra-rich could raise about $1.7 trillion.
The UK has been seen as hesitant about UN negotiations in the past, but there’s been a shift towards a more supportive stance, endorsing the principle that “polluters pay.” A spokesperson for the UK’s Treasury confirmed that the country actively participates in these discussions at the UN and is eager to foster inclusive international tax cooperation.
As these negotiations unfold, the outcome could reshape how both wealthy nations and fossil fuel producers contribute to climate justice and sustainability.
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