Tax the rich: Slow progress on the international front

The French government is under pressure from the opposition and its allies to tax the rich to reduce the country’s yawning budget deficit.

President Emmanuel Macron’s government says it likes the idea, but only if it is done at the international level. There have been a number of initiatives in recent years, but progress has been slow.

More than 140 countries agreed at the end of 2021 to impose a minimum tax on multinational companies under the auspices of the OECD, to combat efforts by firms to shift profits to countries with low rates. Two years later, there has only been limited progress.

One pillar of the reform, a minimum global rate of 15 percent, was implemented on January 1 by several countries, including the European Union. Others like the United States have yet to act. With the United States mired in a presidential election year, little legislative progress is expected. According to the OECD, this tax reform would bring in an additional $200 billion in revenues per year.

Meanwhile nations have yet to reach agreement on the other pillar, aimed at a fairer distribution of tax revenues of multinationals, notably US tech giants. As the process drags on skepticism has grown, with Italy’s Finance Minister Giancarlo Giorgetti recently expressing his “fear the attempt to move towards fair taxation of multinationals on a global level will founder in the impossibility of completing the work”.

Brazil, which chairs the G20 this year, called on the group of nations which account for 80 percent of the world’s economy to adopt a shared stance on preventing tax-dodging by billionaires by July. French Finance Minister Bruno Le Maire spoke publicly in support of a minimum tax on the wealthy.

There are no details yet on what such a tax would look like, with studies ongoing, and it is unclear how many G20 nations would support the measure. “The fact that these people (billionaires) pay very little in tax has become more and more obvious over the years,” French economist Gabriel Zucman told AFP.