Brazil’s Wealth Tax Proposal: Challenges and Global Implications

GS 2: International Relations: Taxing the wealthy

Why is it in the news?

• Brazilian President Luiz Inacio Lula da Silva is championing a plan to tax the world’s wealthiest individuals during the G20 summit in Rio de Janeiro. This initiative targets billionaire tax avoidance and aims to channel funds toward pressing global issues.
• Despite resistance from the United States and divisions in Germany’s former coalition government, G20 finance ministers agreed in July to explore progressive taxation for ultra-wealthy individuals.
• While geopolitical challenges such as the Ukraine and Gaza conflicts and trade tensions dominate discussions, Lula is determined to advance the wealth tax agenda.

More about the news

• French economist Gabriel Zucman’s proposal introduces a 2% annual tax on the net worth of billionaires, including real estate, corporate shares, and investments. With the wealthiest 0.01% currently paying just 0.3% of their wealth in taxes, the levy could generate $250 billion annually.
• This tax would target 2,800 billionaires with a combined net worth of $13.5 trillion. Funds raised would combat global inequality, benefiting low-income, debt-ridden countries and addressing issues like poverty, hunger, and climate change.
• Developing nations, heavily affected by climate change, have long called for financial assistance. Successful initiatives like India’s solar power expansion and Brazil’s Amazon Fund, supported by Norway and Germany, highlight the potential of such funding.
• A global wealth tax could provide crucial resources to advance these efforts, promoting equity and sustainability.
• The wealth tax enjoys public backing, but rising national populism across G20 countries fuels concerns about public fund allocation. Economists emphasize the difficulty of balancing domestic fiscal demands with international obligations.
• Brazil’s G20 presidency also launched the Global Alliance Against Hunger and Poverty to eradicate poverty by 2030. However, Brazil’s lower house recently rejected a domestic wealth tax, reflecting the political challenges of implementing such measures.
• In Brazil and elsewhere, the wealthy frequently use shell companies, trusts, and tax shelters to shield their assets. Despite the nation’s stark inequality, efforts to impose domestic wealth taxes have stalled in Congress.
• Experts suggest that an international consensus on taxing the ultra-wealthy could bolster Brazil’s domestic negotiations, but achieving global agreement remains a significant hurdle.
• The United States remains firmly opposed to the wealth tax proposal. Treasury Secretary Janet Yellen has stated the U.S. will not support the measure. Further, the former President Donald Trump’s tax policies during his first term favoured the wealthy, and he is unlikely to endorse wealth taxes now, despite once proposing a one-time tax on the rich in 2000.
• Africa stands to benefit significantly from the wealth tax, as funds could address poverty and climate change. With the African Union now a full G20 member, the continent gains stronger representation in global policy discussions.
• South Africa’s upcoming G20 presidency further strengthens Africa’s position, enabling it to advocate for equitable taxation and climate financing.

Conclusion

• Despite Lula’s reputation as a skilled negotiator, advancing the wealth tax during the G20 summit remains an uphill task. The summit’s focus on global governance reforms and geopolitical crises limits room for consensus-building on taxing billionaires.
• However, Lula’s role as a mediator between the Global North and South may prove instrumental in navigating this contentious issue.

Pakistani Cargo Ship’s Arrival in Bangladesh Marks a Historic Turning Point

GS 2: International Relations: Pakistan-Bangladesh Relations

Why is it in the news?

• A cargo ship from Karachi arrived at Chattogram port on November 13, marking the first-ever direct maritime connection between Pakistan and Bangladesh.
• Described by Pakistan’s High Commission in Dhaka as a “major step in bilateral trade,” this development signifies a potential shift in the historically strained relationship between the two nations. This shift has gained momentum since the ouster of Bangladesh’s Prime Minister Sheikh Hasina in August 2024.

An Analysis

The Legacy of 1971

• The 1971 Liberation War has profoundly shaped the relationship between Bangladesh and Pakistan.
• During the nine-month war, the Pakistani military and its collaborators committed mass atrocities, leaving an indelible mark on Bangladesh’s national consciousness. Over 3 million people were killed, countless others were tortured and raped, and millions fled their homes.
• Pakistan has never issued an apology or expressed regret for these crimes, hindering reconciliation efforts. Scholars like Bangladeshi-American political scientist Ali Riaz have emphasized the importance of a public apology for healing the relationship.
• However, Pakistan’s narrative continues to blame India for orchestrating the events of 1971, portraying the war as an Indian conspiracy rather than a struggle for liberation.
• This stance is reinforced by Pakistan’s military establishment, which uses anti-India sentiment to consolidate power, making an apology politically unviable.

Sheikh Hasina’s Stance on Pakistan

• Under Sheikh Hasina’s leadership (1996–2001, 2009–2024), Bangladesh’s ties with Pakistan were particularly strained. Hasina prioritized justice for Liberation War atrocities, establishing the International Crimes Tribunal in 2010 to prosecute war criminals and banning the pro-Pakistan Jamaat-e-Islami.
• During her tenure, several razakars (war collaborators) were convicted and executed for their roles in the 1971 atrocities, including Jamaat leader Abdul Quader Mollah. Pakistan’s criticism of these trials further soured relations, with statements from Pakistani leaders appearing to justify the actions of war criminals.
• Simultaneously, Hasina strengthened Bangladesh’s ties with India, her nation’s ally during the Liberation War. Her close relationship with India’s Nehru-Gandhi family and her clampdown on terrorism fostered deeper economic and cultural cooperation between the two countries.

A Changing Landscape

• Three factors following Hasina’s ouster have created a new dynamic in Bangladesh’s relationship with Pakistan:

1) Diminished Resonance of 1971: For the younger generation in Bangladesh, who did not experience the Liberation War, its emotional significance has waned. Hasina’s attempts to label critics as razakars failed to resonate amidst widespread economic and social grievances.

2) Anti-India Sentiment: Resentment towards Hasina’s perceived closeness to India has fuelled anti-India sentiment. Incidents such as the vandalism of the Indira Gandhi Cultural Centre in Dhaka reflect growing dissatisfaction with India’s involvement in Bangladesh’s affairs.

3) Alternative Narratives: A minority in Bangladesh views the events of 1971 not as a liberation struggle but as a betrayal of the Muslim identity established during Partition. The post-Hasina political landscape has seen the Islamist Jamaat-e-Islami, historically aligned with Pakistan, gain prominence.

Pakistan’s Opportunity

• For Pakistan, the current environment presents an ideal opportunity to mend ties with Bangladesh. Pakistani editorials and thought leaders have advocated for reconciliation, urging both nations to set aside the bitterness of 1971 and rebuild relations.
• The interim government in Bangladesh, led by Muhammad Yunus, has shown a willingness to engage. During a meeting at the United Nations General Assembly in September, Yunus and Pakistan’s Prime Minister Shehbaz Sharif discussed revitalizing bilateral cooperation and turning a “new page” in their relationship.

Conclusion

• The docking of a Pakistani cargo ship in Bangladesh could symbolize the beginning of a new chapter in South Asian geopolitics.
• While the shadow of 1971 continues to influence relations, changing political dynamics in Bangladesh and overtures from Pakistan offer a unique opportunity for reconciliation.

 

Honouring Bhagwan Birsa Munda: Tribal Leader and Freedom Fighter

GS 1: Culture and History: Tribal Revolts

Why is it in the news?

• Prime Minister Narendra Modi recently honored Bhagwan Birsa Munda on his birth anniversary, celebrated as Janjatiya Gaurav Divas.

Birsa Munda

About:

• Born on November 15, 1875, in Ulihatu village, Ranchi, Jharkhand, Birsa Munda was a prominent tribal leader, freedom fighter, and folk hero.
• He was from the Munda tribe, a significant community in the Chotanagpur plateau.
• Educated in missionary schools, Birsa learned Western education and Christianity but later rejected colonial influences.

Struggles Against British Colonial Rule:

• Birsa Munda fought against the British policies that exploited tribal lands, advocating for the protection of tribal autonomy and land rights.
• He led the “Ulgulan” (The Great Rebellion) in the late 1890s to reclaim tribal lands and establish a self-governing tribal system, resisting British control and feudal landlords.

Religious and Social Reforms:

• Declaring himself a prophet, Birsa promoted monotheism, unity, and social reform within the tribal community.
• He encouraged a return to indigenous tribal culture, opposing superstitions, alcohol, and missionary conversions.
• Birsa founded a new faith that blended tribal beliefs with his revolutionary ideology.

The Ulgulan Movement:

• Birsa led the Ulgulan movement to reclaim tribal lands, using guerrilla warfare against British forces and feudal landlords.
• In 1900, he was arrested by the British and imprisoned in Ranchi Jail, where he died under mysterious circumstances on June 9, 1900.

Legacy:

• Birsa Munda’s leadership inspired the formation of the Jharkhand state in 2000 and strengthened tribal identity and movements.
• Revered as a symbol of tribal pride, he is honoured as “Bhagwan” (God) by his followers.
• His birth anniversary on November 15 is celebrated as Jharkhand Foundation Day and Birsa Munda Jayanti.

Armed Forces (Special Powers) Act (AFSPA)

GS 3: Internal Security: AFSPA

Why is it in the news?

• The Union Ministry of Home Affairs (MHA) has reimposed the Armed Forces (Special Powers) Act (AFSPA) in six police station jurisdictions across five districts of Manipur.

About AFSPA

• The Armed Forces (Special Powers) Act (AFSPA) was enacted in 1958 to grant special powers to the armed forces in regions declared as “disturbed areas.” Initially intended to address insurgencies in the northeastern states, AFSPA has also been applied in Jammu and Kashmir.

Key Features of AFSPA

• Disturbed Area Declaration: AFSPA can only be enforced in areas declared “disturbed” by the central or state government, typically due to insurgency, terrorism, or communal violence.
• Special Powers for Security Forces: The Act allows security forces to use force, arrest individuals without a warrant, and even shoot to kill if necessary. It also permits searches and seizures without warrants. Armed forces personnel are granted legal immunity from prosecution unless the central government provides sanction.
• Duration of Validity: AFSPA remains in effect until the disturbed area declaration is revoked, and it is periodically reviewed.
• Regions Under AFSPA: Initially applied to northeastern states like Nagaland, Assam, and Manipur, AFSPA has been extended to Jammu and Kashmir since 1990. Some states, such as Tripura and Meghalaya, have revoked it.

Judicial and Legislative Oversight

• The Naga People’s Movement of Human Rights v. Union of India case in 1998 upheld the constitutionality of AFSPA, with the Supreme Court calling for:

1) Consultation with state governments before declaring an area disturbed.

2) A review of AFSPA’s application every six months.

3) Use of minimum force by security personnel.

• Despite recommendations by committees like the Jeevan Reddy Committee (2005) to repeal AFSPA, no concrete action has been taken to amend or repeal the Act.