Wealth tax of 0.5% could cover UK’s fair share of loss and damage fund

The UK’s Christian Aid — a long time supporter of the fair shares approach — just released a very nicely pointed report arguing that the UK could easily cover its share of the global loss & damage need with a minuscule wealth tax.

What they’ve done is taken a plausible estimate of the loss & damage need (insofar as it can even be expressed in money terms) and multiplied it by the UK’s fair share, as estimated by the existing version of the fair shares calculator, using moderately progressive equity settings. 

The Guardian article — see here— summarizes the bottom line:

“Estimates of [potential loss & damage costs] 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.”

This is a lowball figure that doesn’t consider adaptation and mitigation, but this was deliberate.  They didn’t want to get “laughed out of court in a first meeting”.

The report is also interesting for the very wide net it casts, in terms of possible sources of loss & damage finance. Here, quickly, are the top three:

Wealth tax – One option would be to implement a national Net Wealth Tax in line with the parameters set out by the Wealth Tax Commission. A rate of 0.5% levied on wealth in excess of £1m is estimated to raise in the region of £15bn. This has the advantage of being targeted on those who are likely to be disproportionately high polluters in their consumption and personal investments.

Polluter producers’ tax – Another option would see fossil fuel companies generating the UK’s contribution to the Fund. The UK Government could increase the tax on excess profits from fossil fuel production to 95%, which according to Tax Justice UK could raise around £13bn.  Fossil fuel companies are enjoying record profits.

A third option could be combining smaller targeted taxes, such as the existing International Air Passenger Levy (£3.5bn), and revenues from two of the following three options: a) the Emissions Trading Scheme (£6bn); b) an expanded Financial Transactions Tax (£6.5bn) or c) the existing Energy Profits Levy (around £5bn annually). Together these would bring in revenue which could pay the £12.57bn/ $15bn fair share contribution to the Loss and Damage Fund.”

One last thing – this rather alarming chart, which Christian Aid took from the 2023 Climate Inequality Report

What you have here, briefly, is the planetary human population, divided into three slices. The poorest half, on the left, is exposed to 75% of the relative income losses projected to come with climate change, while having only 2% of the global wealth. The richest 10%, on the right, have a much sweeter deal — they enjoy 76% of the wealth, and are exposed to only 3% of the losses.

Go to the the 2023 Climate Inequality Report itself if you need the details here. It’s figure 29.