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.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

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

Cameron’s “No Brexit” campaign wins top business support as Tory front breaks

Seaweed, enzymes and compostable cups: Can ‘Big Food’ take on plastic and win?

A new European banking space is born this year

The EU Consumer Policy on the Digital Market: A Behavioral Economics View

Low quality healthcare is increasing the burden of illness and health costs globally

Can the US deal a blow to EU and Russia together over Ukraine?

Do men and women really have different leadership styles?

The German banks first to profit from public subsidies of trillions

How leaders can use ‘agile governance’ to drive tech and win trust

Right2Water initiative: Is the Commission ready to listen to citizens?

Removing sweets from supermarket checkouts could help fight obesity

EU budget: Commission proposes to increase funding to support the environment and climate action

EU-China relations under investigation?

UN Security Council urged to act against ‘worst-case scenario’ Syria’s war-battered Idlib

Costa Coffee products (Copyright: Costa Coffee; Source: Costa Coffee website, Press area)

The start of the “Caffeine rush”: Coca-Cola acquires Costa Coffee days after Nestlé-Starbucks deal

‘Time is of the essence’ for refugees on Greek islands – UN agency

The JADE Spring Conference 2017 is casting its shadows before

EU Migrant Crisis: Italian Coast Guard Headquarters and Italian Navy to give host national opening addresses at Border Security 2016 in Rome

COP21 Breaking News_04 December: Launch of CREWS, climate risk & early warning systems

Feeding families remains complex task in war-torn Syria – UN relief agency

FROM THE FIELD: How the smell of fresh bread transformed one refugee life

ECB: The bastion of effective and equitable Europeanism keeps up quantitative easing

High-technology manufacturing saves the EU industry

EU: The Member States to pay for national banking problems

MWC 2016 LIVE: Mobile World Congress shows off planes, trams and automobiles

Is deflation a real danger for Eurozone?

To Brexit, or not to Brexit…rather not: 10 Downing Street, London

A Sting Exclusive: “Delivering on the Environmental Dimension of the new Sustainable Development Agenda”, Ulf Björnholm underscores from UNEP Brussels

EU budget: the Common Agricultural Policy beyond 2020

Saudi Arabia: UN experts push for prompt release of women human rights defenders

Finally an answer to the hottest question of European youth today: How to make sure Juncker’s Investment Plan works for youth

UN gender agency hails record-breaking number of women in new US Congress as ‘historic victory’

MEPs to vote on overhaul of road transport rules in July

YO!FEST ENGAGES 8,000 YOUNG EUROPEANS IN FUTURE OF EU

Youth2030: UN chief launches bold new strategy for young people ‘to lead’

Parliament compromises on Banking Union but sends market abusers to jail

The succesful cooperation

Polish PM chooses to focus on economy, amid questions on rule of law in Poland

Education and Training: where do we stand in 2014?

What makes America the world’s most competitive economy?

Sustainability, peace, security ‘best guarantee against instability’ Guterres to Security Council

What we need for a better European Solidarity Corps

G20 LIVE: World Leaders in Turkey for G20 Summit. Global Economy will be discussed in Antalya

How will Brexit affect higher education in the EU?

The New Year 2016 will not be benevolent to Europe

The US bugged Europe: Is this news?

EU should promote immigration as a humanitarian issue in order to provide a more permanent solution

The European Parliament fails to really restrict the rating agencies

Drowning in the Mediterranean this summer? Many happy returns

Cyber defence: MEPs call for better European cooperation

Is Eurozone heading for disinflation?

The US + Britain trivialize mainland Europe, NATO and the EU

5G mobile is nearly here – but we should share networks to make it affordable

Women’s rights in Asia – how far have we come?

Trying to cure bank cancer with analgesics

Migration Crisis: how to open the borders and make way for the uprooted

Data show EU Economy in a stubbornly subdued state

MEPs propose more transparent legislative drafting and use of allowances

The next EU President will first have to drink his tea at Downing Street

European Union: From financial consolidation to deeper political division

More Stings?

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