Support for the creation of a global minimum corporate income tax rate, an idea that had long been discussed within the Organization for Economic Cooperation and Development, gained new momentum with the proposal made in this regard by the US administration headed by Joe Biden.
The working document of the Group of Seven finance ministers, obtained by Reuters, indicates that the world’s seven richest economies will support, at the June 4-5 meeting in London, an “ambitious” agreement with the aim of establishing a minimum tax on corporate profits.
The United States, Canada, Germany, the United Kingdom, France, Italy and Japan intend to provide assurances that once the economic recovery is assured, it will be necessary to “ensure the long-term sustainability of public finances” in order to ensure the conditions for responding to future crises.
In other words, a gradual retreat of economic stimuli adopted in response to the pandemic crisis will be necessary, a goal that contributes to the idea of a lower corporate income tax rate that would allow state revenues to be boosted.
However, there is a guarantee that the “quantitative easing” policies will not be lifted “very soon”. However, as Reuters stresses, there is no indication that the Group of Seven understands the assumptions for a strong recovery.
The G7 believes that if there is political will, it will be possible to reach an agreement at the G20 meeting scheduled for 9 July in Venice.
What is certain is that after the “bazooka” launched by central banks to alleviate the economic and social effects of the Covid-19 crisis, and at a time when signs of recovery converge with the general rise in inflation rates, the debate surrounding the time when expansionary monetary policies retreat.
In April, the United States, which would increase the tax burden internally to fund policies promised by Biden, through Treasury Leader Janet Yellen, proposed a global IRC rate of 21%, however, it has evolved toward proposing no less tax of up to 15%.
This development garnered more supporters directly from the European Union. During the double day of this month’s European Finance Holders (Ecofin) meeting in Lisbon, Economic Commissioner Paolo Gentiloni noted that “it is possible to reach an agreement in principle at the level of the G20. [de 9 de julho] If we work hard in the next few weeks. “