G20 ministers endorse global tax reform deal
The G20 gathering in the Italian city of Venice on Saturday endorsed a move to stop multinationals shifting profits to low-tax havens.
That paves the way for G20 leaders to finalize a new global minimum corporate tax rate of 15 percent at a Rome summit in October, a move that could recoup hundreds of billions of dollars for public treasuries straining under the COVID-19 crisis.
The finance chiefs also recognized carbon pricing as a potential tool to address climate change for the first time taking a tentative step toward promoting the idea and coordinating carbon reduction policies.
The communique, issued on Saturday after a meeting of Group of 20 finance ministers and central bank governors in the Italian city of Venice, which is threatened by rising sea levels, inserted a mention of carbon pricing among a “wide set of tools” on which countries should coordinate to lower greenhouse gas emissions.
Such tools include investing in sustainable infrastructure and new technologies to promote decarbonization and clean energy, “including the rationalization and phasing-out of inefficient fossil fuel subsidies that encourage wasteful consumption and, if appropriate, the use of carbon pricing mechanisms and incentives, while providing targeted support for the poorest and the most vulnerable,” said the communique.
The finance ministers of the world’s 20 largest economies also warned of risk to the global economic recovery from the rise of new coronavirus variants and poor access to vaccines in developing countries.
The communique said the global economic outlook had improved since G20 talks in April thanks to the rollout of vaccines and economic support packages, but acknowledged its fragility in the face of variants like the fastspreading delta.
“We reaffirm our resolve to use all available policy tools for as long as required to address the adverse consequences of COVID19,” it added, noting these should be consistent with preserving stability in prices and public finances.
The communique, while stressing support for “equitable global sharing” of vaccines, did not propose concrete measures, merely acknowledging a recommendation for $50 billion in new vaccine financing by the International Monetary Fund, World
Bank, World Health Organization and World Trade Organization.
“We all have to improve our vaccination performance everywhere around the world,” French Finance Minister Bruno Le Marie told reporters. “We have very good economic forecasts for the G20 economies, and the single hurdle on the way to a quick, solid economic rebound is the risk of having a new wave.”
The biggest policy initiative at the talks was a well-flagged agreement on the global corporate tax rate, capping eight years of wrangling on the issue.
Setting a global floor of 15 percent is intended to stop multinationals shopping around for the lowest tax rate. It would also change the way that companies like Amazon and Google are taxed, basing it partly on where they sell products and services, rather than on the location of their headquarters.
US Treasury Secretary Janet Yellen said any countries opposed to it would be encouraged to sign up by October.
In addition to EU holdouts Ireland, Estonia and Hungary, other countries that have not signed on include Kenya, Nigeria, Sri Lanka, Barbados and St. Vincent and Grenadines.