Are the G20 leaders ready to curb corporate tax-avoidance?

G20 Summit in Hangzhou, China. Group photo, from left to right, in the 1st row: Michel Temer, President of Brazil, Joko Widodo, President of Indonesia, Enrique Peña Nieto, President of Mexico, Jacob Zuma, President of South Africa, Barack Obama, President of the United States, Angela Merkel, German Federal Chancellor, Xi Jinping, President of the People's Republic of China, Recep Tayyip Erdoğan, President of Turkey, Vladimir Putin, President of Russia, François Hollande, President of the French Republic, Park Geun-hye, President of South Korea, Mauricio Macri, President of Argentina, and Narendra Modi, Indian Prime Minister, in the 2nd row: Mohammed bin Salman, Vice-Prince of Saudi Arabia and Saudi Arabian second Deputy Prime Minister, Theresa May, British Prime Minister, Malcolm Turnbull, Australian Prime Minister, Matteo Renzi, Italian Prime Minister, Bounnhang Vorachith, President of Laos, Noursoultan Nazarbaïev, President of Kazakhstan, Idriss Déby, President of the African Union and President of Chad, Macky Sall, President of Senegal, Abdelfatah Khalil al-Sisi, President of Egypt, Shinzō Abe, Japanese Prime Minister, Justin Trudeau, Canadian Prime Minister, Donald Tusk and Jean-Claude Juncker, in the 3rd row: Mark Carney, Chairman of the Financial Stability Board, Roberto Azevêdo, Director-General of the World Trade Organization (WTO), Christine Lagarde, Managing Director of the International Monetary Fund (IMF), Prayut Chan-o-cha, Thai Prime Minister, Lee Hsien Loong, Singaporean Prime Minister, Mariano Rajoy Brey, Spanish Prime Minister, Ban Ki-moon, Secretary General of the United Nations, Jim Yong Kim, President of the World Bank, Guy Ryder, Director-General of the International Labour Organization (ILO), and Angel Gurría, Secretary General of the Organisation for Economic Co-operation and Development (OECD). (Date: 04/09/2016. Location: Hangzhou. © European Union, 2016 / Source: EC - Audiovisual Service/ Photo: Etienne Ansotte).

G20 Summit in Hangzhou, China. Group photo, from left to right,
in the 1st row: Michel Temer, President of Brazil, Joko Widodo, President of Indonesia, Enrique Peña Nieto, President of Mexico, Jacob Zuma, President of South Africa, Barack Obama, President of the United States, Angela Merkel, German Federal Chancellor, Xi Jinping, President of the People’s Republic of China, Recep Tayyip Erdoğan, President of Turkey, Vladimir Putin, President of Russia, François Hollande, President of the French Republic, Park Geun-hye, President of South Korea, Mauricio Macri, President of Argentina, and Narendra Modi, Indian Prime Minister,
in the 2nd row: Mohammed bin Salman, Vice-Prince of Saudi Arabia and Saudi Arabian second Deputy Prime Minister, Theresa May, British Prime Minister, Malcolm Turnbull, Australian Prime Minister, Matteo Renzi, Italian Prime Minister, Bounnhang Vorachith, President of Laos, Noursoultan Nazarbaïev, President of Kazakhstan, Idriss Déby, President of the African Union and President of Chad, Macky Sall, President of Senegal, Abdelfatah Khalil al-Sisi, President of Egypt, Shinzō Abe, Japanese Prime Minister, Justin Trudeau, Canadian Prime Minister, Donald Tusk and Jean-Claude Juncker,
in the 3rd row: Mark Carney, Chairman of the Financial Stability Board, Roberto Azevêdo, Director-General of the World Trade Organization (WTO), Christine Lagarde, Managing Director of the International Monetary Fund (IMF), Prayut Chan-o-cha, Thai Prime Minister, Lee Hsien Loong, Singaporean Prime Minister, Mariano Rajoy Brey, Spanish Prime Minister, Ban Ki-moon, Secretary General of the United Nations, Jim Yong Kim, President of the World Bank, Guy Ryder, Director-General of the International Labour Organization (ILO), and Angel Gurría, Secretary General of the Organisation for Economic Co-operation and Development (OECD). (Date: 04/09/2016. Location: Hangzhou. © European Union, 2016 / Source: EC – Audiovisual Service/ Photo: Etienne Ansotte).

Last Monday, the G20 meeting in Hangzhou – the capital of China’s eastern Zhejiang province – the first gathering of the 20 world leaders to be held in the vast country, was not marked by the determination to face up to economic misery and the pitiless wars in Syria, Libya, South Soudan, Yemen, Mali and elsewhere. Instead, the G20 conference was used by a number of participants like the US, Turkey and Russia and some outsiders like North Korea to promote their own egotistic interests.

For one thing, Pyongyang, on the day the leaders gathered in neighboring China, launched not one but three ballistic missiles, to remind everybody that they can do a lot of harm. On the other side of the global spectrum, Barack Obama, the outgoing US President, got involved in a tarmac controversy with his Chinese hosts, about how he was to disembark from the Air Force One plane.

Curbing corporate tax-avoidance

As for the important issues discussed in the meeting, like protectionism and free trade, the leaders had only a lip service to offer. On the contrary, the 20 largest countries of the world were much more concrete about the corporate tax-avoidance issue. This is due to the hard pressure applied by the Organization for Economic Cooperation and Development. OECD has come up with a plan to put together a black list of tax-haven countries and territories. It would have been politically incorrect by the 20 heads of government and state to ignore the Organization’s uncompromising proposals.

Incidentally, the currently agreed mega-merger in the advertising sector, between the French firm Publicis with the American giant Omnicom seems to have problems exactly on this account. The two companies have openly accepted that they are merging in order to pay fewer taxes. They plan to move the headquarters of the new company to Holland and make it tax resident in Britain. However, it turns out that the tax administrations of both countries don’t seem cooperative as was the case until recently. Tax experts say that this is due to the G20 plans to curb the corporate tax-avoidance schemes.

Punishing tax havens

The French minister for Finance Michel Sapin, who accompanied Francois Hollande in Hangzhou, confirmed that the 20 leaders adopted the OECD criteria to classify a country in the black list of tax-havens. He also explained that this issue didn’t have the general consensus six months ago. Sapin went on and revealed that the list will be drafted until July 2017 and together with it the measures to be taken against those countries and territories will be decided.

In his Press conference after the G20 meetings, Barack Obama adopted on the issue of taxation a different but not diverging attitude. Obviously, he was under the spell of the Apple affair, where the American technology giant was fined by the European Commission with €13 billion in back taxes. He said that the US must go along with the rest of the countries in the tax avoidance problem, “because some allies have reached the limits with their tax policies”. He stopped short of mentioning the Apple case though.

Wishful blabbering on growth

For the burning problem of the stagnating global economy the G20 had only wishful blabbering to present. The final communiqué calls for structural, monetary and fiscal measures to be employed in support of economic growth. The problem is though that most of the G20 governments are close to over-indebtedness and thus are rather unable to increase public deficits and borrowing, by either reducing taxation or increasing spending. In short, as things stand now, public spending cannot be safely used as an effective growth force.

As for the central banks, they have already surpassed the charted waters of free financing of the lenders and through them of the economy itself. Any increase of the monetary circulation or further cutbacks of the currently negative, zero or close to zero interest rates may produce unpredictable backlashes. The G20 also appeared more wishful than realistic in trying to touch on the issue of the global over-production of steel and steel products, which torment the heavy industrial sector of all its members. Again, no effective measures were proposed, let alone adopted.

The truth is that it’s impossible for whatever international gathering to effectively counter industrial over-production and the glut of goods. A globally accepted and meticulously applied multiannual economic plan is needed for that. However, this would be tantamount to the West bowing to the exorcised ‘planned economy’ of the communist ideology.

What about the TPP?

Another most important issue raised last Monday in Hangzhou, but which didn’t reach the first pages of the major English language Press, was the Trans Pacific Partnership between the US and 11 nations (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam). Obama was asked about that by a journalist at the Press Conference after the G20 meeting and replied that “Washington would approve the pact”.

However, the Republican nominee for Presidential candidate, Donald Trump, has clearly stated that, if elected he will not approve the TPP. The opposition against this trade Partnership in the US Congress and the public opinion has vastly grown during the 2016 presidential campaign. As for the Democratic candidate, Hillary Clinton, she is rather lukewarm about it. The vote in the Congress for the TPP is scheduled to take place after the Presidential election of 8 November. To be noted, that it has taken five years to conclude the negotiations for the Partnership.

In conclusion, the only major problem of our brave new world that the Hangzhou G20 tackled is the tax-avoidance schemes, employed by multinational corporations and wealthy individuals. If what Michel Sapin said turns out to be realistic, the world may be a bit less unfair place for those who work hard and pay their taxes.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

A Sting Exclusive: “China is Making Good Stories not Bad Ones”, Ambassador Yang highlights from Brussels

The latest emoji are more inclusive – but who approves them?

“China is the only BRICS country to have either met or possibly slightly surpassed my expectations”, BRICS inventor Jim O’ Neil from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

Schengen: new rules for temporary checks at national borders

Coronavirus: Commission launches data sharing platform for researchers

Parliament calls on member states to fully exploit the European Youth Guarantee

Solutions for cultural understanding: medical students’ perspective

EU-Western Balkans summit in Sofia

Afghanistan: EU reinforces humanitarian support with €40 million as crisis worsens

EU migrant crisis: Germany, France and UK to show the way. Will the rest of the EU follow?

Humanitarian aid: EU mobilises over €18 million for the Central African Republic in 2019

The European Sting @ European Business Summit 2014 – the preview

The European Parliament wants to stay in one place

Has the treacherous theory about the ‘French patient’ finally prevailed?

The world to teach Germans to…un-German

Thursday’s Daily Brief: ambulance attack in Libya, #GlobalGoals defenders, human rights in Cambodia, Swine Fever

Drinking water: new plans to improve tap water quality and cut plastic litter

Antitrust: Commission consults stakeholders on guidance for national courts when handling disclosure information

MEPs urge the EU to lead the way to net-zero emissions by 2050

Brexit must not put UK university research at risk

Digital Finance: Commission holds closing pan-European conference following extensive outreach events

First-ever World Braille Day underscores importance of written language for human rights

Greece @ MWC14: Greek-born mobile champions at MWC 2014

Threats from mammoth banks and Brussels fuel May’s poll rates

How fungi could save the world

Costa Rica is one of the world’s happiest countries. Here’s what it does differently

Gender equality: Breaking the glass ceiling

Higher education becoming again a privilege of the wealthy?

Here are three ways blockchain can change refugees’ lives

More than 3,400 classrooms damaged or destroyed by Cyclone Idai in Mozambique, says UN Children’s Fund

Three ways Finland leads the world – and education isn’t one of them

European Semester 2019 Spring Package: Commission issues recommendations for Member States to advance sustainable and inclusive economic growth

Coding in Namibia: UN supports young women’s computing career dreams

Protection of workers from biological agents: how to classify COVID-19

Back to the Basics: Primary Healthcare

New EU telecom rules: latest actions in time for transposition deadline

Where is Egypt leading the Middle East and the Mediterranean economy?

Taj Mahal closes as European Union considers non-essential travel ban – Today’s COVID-19 updates

The world’s economy is only 9% circular. We must be bolder about saving resources

Closure of borders: Civil Liberties Chair demands proportionality and coordination within the EU

Cultivating mental well-being while tackling food insecurity

5 ways cities can use emerging technologies to fight climate change

35th ACP-EU Assembly: migration and demographics will dominate the debate

Welcome to the COVID-19 era of world sport

Yanukovych attempts a violent and deadly cleansing of Kiev’s center

COP21 Breaking News_03 December: Argentina Accepts KP Amendment

European Democracy Action Plan: making EU democracies stronger

UN chief welcomes G20 commitment to fight climate change

Afghanistan: Bring ‘architects’ of latest ‘appalling’ suicide bombing to justice, says deputy UN mission chief

More women and girls needed in the sciences to solve world’s biggest challenges

Reducing deforestation means getting serious about environmental crime

Brexit: With May gone the Tory divide is to sink the UK despite Brits wanting to ‘Remain’

Around 600,000 Afghan children face death through malnutrition without emergency funds: UNICEF

Brexit: the Commission proposes the creation of a Brexit Adjustment Reserve

Tigray conflict: EU humanitarian support to Ethiopian refugees reaching Sudan

‘Air bridge’ vaccination operation begins for Ebola-hit communities in DR Congo

UN forum spotlights cities, where struggle for sustainability ‘will be won or lost’

Without tackling ‘gross inequalities’ major issues will go unsolved, warns UN rights chief Bachelet

A Sting Exclusive: EU Commission’s Vice President Šefčovič accentuates the importance of innovation to EU’s Energy Union

More than four in 10 women, live in fear of refusing partner’s sexual demands, new UN global study finds

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s