This is reposted from the Asian Peoples’ Movement on Debt and Development here.

A global briefing titled “Tax the Polluters, Rewrite Global Tax Rules: Financing Survival, Resilience, and Just Transition in Asia” exposed the stark injustice at the heart of the global financial system today: as the world’s top 100 energy majors pocket historic profits, developing nations across the Global South are being forced into deeper debt simply to survive escalating climate disasters.

The briefing presented a concrete policy design for a progressive 20% “Polluter Pays” surtax on fossil fuel super-profits. This proposed measure draws on research from the European Network on Debt and Development (Eurodad) and the Global Alliance for Tax Justice (GATJ),

A surtax is an additional fee levied on top of an already existing tax liability. It functions as a targeted surcharge applied to a base tax that individuals or corporations are already required to pay. This measure is frequently utilized by governments to generate essential revenue for specific public initiatives, infrastructure projects, or economic relief efforts.

Currently, tax revenues across developing countries fall drastically short of funding basic public services, let alone disaster recovery and climate loss. Decades of corporate profit-shifting, offshore tax havens, and archaic global tax rules drafted by wealthy nations have shielded energy giants from accountability.

“Big Oil is pocketing trillions in record earnings while communities in climate-vulnerable countries pay the ultimate price of climate breakdown—enduring catastrophic floods, heatwaves, and loss of life,” said Lidy Nacpil, Coordinator of Asian Peoples’ Movement on Debt and Development (APMDD), which organized the briefing. “We are demanding climate reparations and tax justice. A global surtax on fossil fuel profits at source is a necessary step to end polluter impunity, uphold legal obligations under the ICJ Advisory Opinion, and guarantee a fully funded, just transition for the Global South.”

The financial imbalance remains glaring. In 2023 alone, the oil and gas industry generated $2.7 trillion in net income while funneling a mere 4% of capital expenditure into clean energy, retaining 96% to expand fossil fuel extraction.

“Under new global tax rules currently being negotiated at the United Nations, governments have a historic window to enact a binding ‘Polluter Pays’ tax on the world’s largest oil and gas companies,” explained Markus Trilling, author of the report Make Polluters Pay: Proposal for a Surtax on Fossil Fuel Industries’ Profits. “Had a 20% profit surtax been levied since the Paris Agreement in 2015, it would have generated over $1.08 trillion in public revenue globally. Even looking at just the last three years—a period of soaring household energy bills and brutal climate impacts—a 20% tax would have redirected $567 billion out of corporate vaults to serve as a vital lifeline for frontline communities.”

The report emphasizes that surtax revenues must not replace existing foreign aid or climate finance commitments, but rather serve as additional, grant-based funding dedicated to disaster recovery, rebuilding, and clean energy deployment. To accelerate the global phase-out of fossil fuels, it proposes starting the surtax at 20% and scaling it progressively to 100% by 2050.

While international negotiators hammer out details at the UN level, the report urges individual governments to enact immediate domestic profit surtaxes on fossil fuel companies operating within their borders, alongside regional alliances establishing minimum corporate tax floors to prevent tax evasion.

“For decades, global tax rules written by rich nations have given fossil fuel multinationals a free ride to extract billions in super-profits from the Global South, leaving Asian nations trapped in unsustainable debt to recover from disasters,” said Charles Santiago, former Malaysian Member of Parliament and APMDD Regional Committee member. “By rewriting global tax rules to establish a direct profit surtax, we can compel polluters to pay for the destruction they caused and unlock predictable, non-debt climate finance for our survival.”

Civil society organizations engaging in the negotiations for the UN Framework Convention on International Tax Cooperation are calling for binding global rules that anchor climate justice, human rights, and the Polluter Pays Principle into the core text. Specifically, groups are pushing for operational mechanisms under Article 4 to mandate progressive environmental taxation, establish binding global minimum surtaxes on polluting multinationals, and institute rules that reallocate taxing rights directly to the nations enduring the brunt of resource extraction and climate damage.

NOTES FOR MEDIA

Here are notes based on the presentation “Taxing polluting capital: Profit taxation for catalyzing supply-side transformation” delivered by Markus Trilling (Senior Policy and Advocacy Officer – Tax Justice, Eurodad):

Proposal

• Imposing a global surtax on the profits (net pre-tax income) of fossil fuel corporations—implemented nationally, regionally, and globally under a unitary taxation framework.
• A corporate profit surtax targets capital allocation and capital costs directly. Unlike traditional carbon taxes, it does not target consumption or burden end-users.
• The fossil fuel industry generates colossal profits, enriches wealthy shareholders, and continues to reinvest in expanding fossil fuels rather than transitioning to clean energy.

Financial data and scale of profits

• Massive revenues: Fossil fuel industry profits drastically outpace other major global sectors: In 2023, the world’s top 100 oil and gas companies generated $921 billion in pre-tax income. By comparison, the global pharmaceutical sector had ~$207.7 billion in operating income, the top 5 tech giants (Apple, Microsoft, Alphabet, Meta, Amazon combined) made ~$290 billion in net income in the 12 months to September 2023, and overall commodity traders generated ~$100+ billion in earnings in 2023.
• Revenue potential: A fossil fuel profit surtax (starting at 20% and increasing over time) could have raised over $1 trillion in climate finance had it been collected since the Paris Agreement.
• Geographic breakdown: In 2024, 15.67% of the profits of the world’s top 100 corporations were generated by companies headquartered in Europe.

Tax structure and technical design

• Unitary taxation and consolidated profits: The surtax must be levied on consolidated global profits to prevent multinational energy firms from shifting windfall profits into tax havens. Analysis of the 2022 EU energy crisis showed that a properly implemented windfall tax on consolidated profits could have collected €73.8 billion—nearly three times the officially reported collection—because companies engaged in tax avoidance across jurisdictions.
• Applies across the full value chain using North American Industry Classification System codes:
  • Upstream: Crude petroleum and natural gas extraction.
  • Midstream: Pipelines and transmission.
  • Downstream: Petroleum refineries, terminals, and gas stations.
• All proceeds from the surtax should be explicitly earmarked for international climate finance, such as UNFCCC obligations.

Economic, social, and climate equity

• Progressive vs. Regressive: Carbon taxes hit consumers, acting as a regressive tax that disproportionately burdens lower-income households. Profit surtaxes hit wealthy corporate owners and shareholders without direct cost pass-through to electricity/fuel prices.
• According to the Climate Inequality Report 2023, the global top 1% by wealth account for nearly 15% of total greenhouse gas emissions.
• Relative return on investment dictates where capital flows. High fossil fuel returns disincentivize clean energy transition unless structural taxation shifts profitability toward green investments.

International governance and the UN Tax Convention

• Global tax reform must align with international climate finance goals.
• The ongoing establishment of a UN Tax Convention provides a historic opportunity to unite climate justice and tax justice under a legal framework incorporating the “Polluter Pays” principle.

Here are notes based on the presentation “The Tax–Debt–Climate Justice Nexus” delivered by Lidy Nacpil (Coordinator, APMDD)

• The Nexus: The climate crisis, sovereign debt, and tax injustice are not separate issues—they are deeply interconnected outcomes of an unequal global economic system rooted in colonialism and structural extraction.
• Core Demand: Climate justice requires more than financial transfers; it demands stopping ongoing systemic harm, repairing historical and ecological damages, and fundamentally redistributing global wealth and policy space.
• Debt as a lock-in mechanism for extraction: High debt-servicing costs siphon critical public revenues away from adaptation, loss and damage response, renewable energy, and essential services. To pay external creditors, indebted Global South nations are pressured to earn foreign currency by continually expanding fossil fuel and resource extraction. This creates a vicious cycle: when climate disasters strike, severe economic losses force these countries into new borrowing—driving up debt service, eroding resilience, and locking them into deeper future vulnerability.
• Tax justice and ending the “fiscal scarcity” myth: Governments in the Global North frequently cite fiscal scarcity to excuse inadequate climate action, even as vast private fortunes, corporate windfalls, and financial assets remain largely undertaxed. Enforcing wealth taxes on billionaires, targeting corporate windfalls, introducing financial transaction taxes, and ending fossil fuel privileges would unlock trillions in public revenue. Shifting away from regressive tax structures to tax wealthy capital owners ensures that the burden falls on those most responsible, funding an equitable transition.
• Climate Finance is an obligation, not charity: Loan-based climate finance creates new interest obligations, turning climate aid into another channel of financial extraction. Climate finance must be adequate, predictable, additional, and primarily public and grant-based, rooted in historical responsibility and capacity.
• The reparations framework (addressing both sides of the equation): To deliver reparations, the global community must address two simultaneous requirements: Mobilize trillions in public, grant-based climate finance and execute direct reparative transfers.
•  The historical, ecological, and climate debts owed to the Global South far exceed the financial debts being extracted from them. 
• Providing climate finance while allowing systemic extraction to continue renders climate finance entirely ineffective. Delivering climate justice requires halting this structural drain by canceling unsustainable and illegitimate debt, curbing profit repatriation, tax abuse, and illicit financial flows, reforming unequal trade and investment agreements, and bringing extractive resource flows to an end.
• System change requires a coordinated effort across policy, finance, and international governance. To break free from fossil-fuel lock-in, global economic incentives must be shifted away from extractive capital in favor of sustainable development. Canceling illegitimate debt is essential to restoring sovereign policy space, giving Global South governments the fiscal flexibility needed for public investment, green industrialization, and a just transition. Finally, unifying global frameworks by aligning international tax reform, such as through the UN Tax Convention, with UNFCCC climate obligations will ensure the global enforcement of the “Polluter Pays” principle.

Contact:

Lani C. Villanueva

Mobile/WhatsApp +63 9052472970