There are increasing calls for a wealth tax to fund a climate transition. A huge amount of money is needed to fund infrastructure, pay for loss and damage and to protect vulnerable groups, be they fossil fuel workers, agricultural workers, and people living in areas suffering from climate extremes.

It is quite obvious that there must be a huge flow of funds from the global north to the global south. But this call is often framed as a struggle between nations, in which governments of wealthy countries must pay governments of poor countries. Moreover, the far right in the global north will argue that a national obligation to pay money using the national budget is an attack on all who live in their particular country, regardless of individual wealth, class or community.

However for socialists, the redistribution of wealth should not be made on the basis of nationality, but on the basis of class and need

Also, a wealth tax is clearly aimed at the very rich who can afford it, and who are generally those most responsible for the climate crisis. It is a redistribution of wealth from the rich to the poor.

Trillions of dollars needed

The needs are enormous. For climate finance to be meaningful in a just transition, it needs to be global in scope. An “Independent High-Level Expert Group on Climate Finance” estimated that more than $2 trillion per year is needed to pay for energy transition, adaptation, resilience, loss and damage, and conservation in poor countries. The true cost is probably higher.

As with many mainstream experts on climate finance, this “independent” group advocated mainly loan finance. This is pure fantasy. Poor countries are already struggling to pay off heavy loans.

For these global needs there will have to be global efforts to collect the tax from tax havens and force reluctant billionaires to pay up. The world is facing a planetary emergency, and it makes perfect sense to have a large once-off wealth tax which would eat into the wealth of the very rich.

In addition to a tax on individuals, there should also be a massive once-off tax on the very wealthy large international corporations.

Debt cancellation, local oversight

Transfers of money to the global south should be accompanied by a general cancellation of debts owed to international finance institutions such as the IMF and World Bank. It makes no sense to maintain economic burdens on poor countries. But finance for these countries must have rules about local oversight and transparency.

A wealth tax is not a socialist solution. It is a financial measure that could, in theory, be accommodated within a capitalist economy. But on the scale required, it would be resisted tooth and nail by the wealthy, the corporations and the governments that protect them. A huge campaign by climate activists and workers would be needed to force through any tax with real teeth. A successful such mobilization would be a huge step towards a socialist transformation.