ANALYSIS: Priorities for South Africa's G20 presidency – a missed opportunity to centre tax reform
South Africa’s presidency of the G20, following that of Brazil, is significant for many reasons, writes Malaika Mahlatsi.
South Africa’s President Cyril Ramaphosa is pictured during the group photo after attending the meeting on Sustainable Development and Energy Transition at the G20 Leaders' Meeting in Rio de Janeiro, Brazil, on 19 November 2024. Picture: Mauro PIMENTEL/AFP
On the 1st of December 2024, South Africa assumed the presidency of the Group of 20 (commonly referred to as G20), an intergovernmental forum comprising 19 sovereign countries as well as the European Union (EU) and the African Union (AU).
It is a powerful institution that deliberates on issues of the global economy and political economy and develops policies and frameworks aimed at addressing challenges related to international financial stability, sustainability, climate change, poverty and related matters.
Together, G20 members account for around 85 percent of the global gross domestic product (GDP) and 75 percent of international trade, making the institution an important instrument for addressing global challenges.
South Africa’s presidency of the G20, following that of Brazil, is significant for many reasons. For one thing, it will be the first time that an African country has presided over the G20 since it was founded in 1999.
While former finance minister, Trevor Manuel, was the chairperson of the G20 in 2007 when South Africa hosted the secretariat, the presidency of the institution has never been held in Africa.
Addressing the official assumption of South Africa’s presidency over the past weekend, President Cyril Ramaphosa stated that the country has adopted the theme: “Solidarity, Equality and Sustainability” for its G20 presidency.
This is not a radical departure from the theme that was adopted by Brazil for its 2024 presidency: “Building a Just World and a Sustainable Planet”. Asserting that South Africa will use its presidency to bring the development priorities of the African continent and the Global South more firmly onto the agenda of the G20, Ramaphosa outlined the key priorities that will be focused on by South Africa.
The first is taking action to strengthen disaster resilience. He contended that the increasing rate of climate-induced natural disasters is affecting countries around the world, with a devastating impact on poor nations.
As such, South Africa would elevate this issue to the leader level, calling for the global community, including international financial institutions, development banks and the private sector, to scale up post-disaster reconstruction.
The second priority for South Africa is taking action to ensure debt sustainability for low-income countries.
Ramaphosa argued that the key obstacle to inclusive growth in developing economies, including many in Africa, is an unsustainable level of debt which limits their ability to invest in infrastructure, healthcare, education and other development needs.
He stated that South Africa’s presidency would advance sustainable solutions to tackle high structural deficits and liquidity challenges and extend debt relief to developing economies.
He further stated that South Africa’s presidency “will also seek to ensure that the sovereign credit ratings are fair and transparent and to address high-risk premiums for developing economies”.
The third key priority for South Africa’s G20 presidency is the mobilisation of finance for a just energy transition.
Ramaphosa stated that South Africa’s presidency would seek to secure agreement on increasing the quality and quantity of climate finance flows to developing countries.
This would include strengthening multilateral development banks, enhancing and streamlining support for country platforms such as the Just Energy Transition Partnership and more effectively leveraging private capital.
The fourth key priority is harnessing critical minerals for inclusive growth and development. The president spoke of beneficiation, arguing that it was crucial to ensure that the countries and local communities endowed with critical minerals resources are the ones to benefit the most.
In addition to these four key priorities, South Africa’s G20 presidency has also committed to the establishment of three task forces.
The first task force is on Inclusive Economic Growth, Industrialisation, Employment, and Reduced Inequality. The second task force is on Food Security. And the third task force is on Artificial Intelligence, Data Governance and Innovation for Sustainable Development.
An important issue that Ramaphosa was completely silent on is that of tax reform, which dominated the discussions at the recent G20 Social and G20 Leaders’ summits in Rio de Janeiro.
Civil society organisations, who are an integral part of G20 discussions through the G20 Social Summit platform, fought hard for tax reform to be a G20 priority.
Their demand was for the G20 to set the foundations of a comprehensive global standard to raise taxes on the richest one percent – not just on billionaires – at high enough rates to meaningfully reduce economic inequality. Governments must also combine this with mechanisms to end tax avoidance.
Making a case for the taxing of the richest one percent, Oxfam, an international non-governmental organisation with offices in Johannesburg, argued that progressive taxation is one of the most effective tools at government's disposal to address extreme levels of economic inequality and a cornerstone of defending and strengthening democratic societies.
The organisation contended that progressive tax serves every government’s interest to install global coordinated tax standards.
Civil society organisations argue that a progressive deal to tax the super-rich could raise the trillions of dollars needed to tackle extreme inequality and climate catastrophe and invest in tackling poverty and hunger in countries all over the world.
Despite the recent summit endorsing the Rio de Janeiro G20 Ministerial Declaration on International Tax Cooperation, which states in part: “With full respect to tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed”, Ramaphosa didn’t mention tax reform as a priority for South Africa’s G20 presidency.
This is a missed opportunity for South Africa to be at the centre of one of the most significant interventions in the fight against global inequality and uneven power relations.
Progressive tax, with specific reference to the taxing of the super-rich, is an important weapon for alleviating poverty and inequalities.
It would've been especially profound for a South Africa that has one of the highest levels of inequality in the world to have used its G20 presidency to centre tax reform, particularly as the National Treasury confirmed to parliament a few weeks ago that it is exploring the feasibility of a wealth tax.
The Treasury stated that in collaboration with the South African Revenue Service (SARS), it was analysing data on declared wealth to better understand its distribution.
South Africa had an opportunity to take a firmer position on this, and to affirm support for the recommendation to include in the United Nations Framework Convention on International Tax Cooperation (UNFCITC) the creation of a global minimum tax on the super-rich.
We missed that opportunity and by so doing, let down the developing world.
Malaika is a geographer and researcher at the Institute for Pan African Thought and Conversation. She’s a PhD in Geography candidate at the University of Bayreuth in Germany.