FRIEDRICH-EBERT-STIFTUNG – HOW TO TAX A BILLIONAIRE – AN ADVOCACY TOOL AGAINST TAX PRIVILEGES FOR THE SUPER-RICH EXAMPLE 1 The Brazilian“Privilegiometro Tributário”(Tax Privi­leg-o-meter) , prepared by the Brazilian National Associa­tion of Tax Auditors(UNAFISCO), is largely based on the “Demonstrativo dos Gastos Tributários”(Tax Expenditure Report), and is published each year together with the na­tional budget. The Privilegiometro analyses the justifications and the economic and social value for 91 different tax rules and identifies those tax expenditures that are fully or partial­ly classified as tax privileges. These are defined as expendi­tures that have no adequate and proven impact on sustain­able economic development without increasing inequality. 13 Out of the ten biggest privileges identified by UNAFISCO, the two biggest privileges are not addressed in the tax ex­penditure report by the government. These are the exemp­tion of dividends and the wealth tax that is provided for in the Brazilian Constitution, but not put down in legislation. These are responsible for about one-third(31 per cent) of the losses from all 91 tax expenditures. Two other items from the government’s tax expenditure report – the sim­plified income tax scheme for small businesses and exemp­tions from VAT for basic-needs items – were classified only as a partial privilege, but still made it to the top ten of UN­AFISCO. 14 EXAMPLE 2 The German inheritance tax privilege is listed in the government’s tax expenditure report. Based on statistical data for 2019, the bi-annual report of 2021 extrapolates the costs for the years 2020 and 2021. The resulting figure un­derestimates the true cost by an approximate factor of two because the inheritance volume in 2021 exceeds estimates based on the latest available statistics and because a central element of the privilege is not captured in the statistical da­ta. According to the so-called Verschonungsbedarfsprü­fung, taxes are first levied(and are accordingly taken into account in the statistics), but not collected if taxpayers demonstrate their eligibility for the exemption. 15 TAX GAP ANALYSES AND OTHER SOURCES Tax administration and the comprehensive collection of taxes due play an important role for tax justice, but data is difficult to interpret and compare. The IMF regularly(every year start­ing in 2023) conducts surveys in 159 jurisdictions to under­stand revenue administration(ISORA) and has produced 150 assessment of tax administrations using 55 metrics(TADAT). The OECD also publishes comprehensive statistics for OECD and other advanced and emerging economies(OECD, 2017). Some countries(20 according to ISORA, 14 OECD countries) also perform so-called tax gap analyses, including top-down (based on national accounts data) and bottom-up(for exam­ple using random audits) approaches, and are usually limited to value-added taxes, personal income taxes and sometimes corporate income taxes. SOURCE 3: TAXATION OF A TYPICAL SUPER-RICH INDIVIDUAL Where globally comparable data is not sufficient and detailed data on the tax system at the national level is not available or too complex to analyse, we suggest using a typical super-rich individual to illustrate issues relating to a tax regime. There are two options here: a) using a billionaire owning easy-to­trace assets such as shares in a listed company that publishes detailed information on its profits and taxation and using this “real-life” data to calculate the tax rate, and b) constructing a portfolio of a typical super-rich individual and describing their taxation more comprehensively. 13 The original definition is:“O conceito de privilégios tributários que se propõe é o de que privilégios tributários são aqueles gas­tos tributários – oriundos da omissão na criação de tributo con­stitucionalmente previsto e das isenções, anistias, remissões, subsídios, benefícios de natureza financeira, tributária e creditícia – concedidos a setores ou parcelas específicas de contribuintes, sem que exista contrapartida adequada, notória ou comprovada por estudos técnicos, para o desenvolvimento econômico sustentável sem aumento da concentração de renda ou para a diminuição das desigualdades no País.” 14 More information on this is available at http://www.privilegiometro­tributario.org.br/images/Nota_tecnica_Unafisco_No_24_2021-v8. pdf(in Portuguese). 15 More details on this can be found at https://www.netzw­erk-steuergerechtigkeit.de/elementor-10684/(in German). 22