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

Advertising

Featured Stings

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

Phone lines open between Ethiopia and Eritrea, and people are calling strangers

EU continues targeting on Chinese steel imports instead of the revival of its own economy

‘Terror and panic’ among Rohingya who may be forced to return to Myanmar – UN rights chief

SMEs and micro firms sinking together with south Eurozone

For video game addiction, now read official ‘gaming disorder’: World Health Organization

Euro-Mediterranean Assembly fixes its permanent seat in Rome

UN Forum examines three pillars of 2030 Global Goals

Why is the EU launching a doomed policy in stopping immigrant waves? What are the real targets?

The migration crisis is slowly melting the entire EU edifice

Global Citizen-Volunteer Internships

A European Discovers China: 3 First Impressions

Lies and reality about incomes and wealth in the EU

The EU Commission openly repudiates the austere economic policies

Parliament approves key directive regulating professional qualifications

UN chief welcomes resolution to 27-year-old disagreement over renaming the former Yugoslav Republic of Macedonia

EU unveils plan to accelerate Capital Markets Union ahead of London’s departure from the bloc

Key Brazilian border crossing for Venezuela refugees reopens as asylum numbers pass last year’s total

Digital development: technology-enabled, but human-centric

10 months were not enough for the EU to save the environment but 2 days are

London to say hello or goodbye to Brussels this week

MEPs want robust EU cyber defence and closer ties with NATO

Brussels enraged with Swiss referendum result to keep out EU citizens

Conflict and climate change challenge sustainable development effort: UN report

Nicaragua must end ‘witch-hunt’ against dissenting voices – UN human rights experts

Discussion at Europe House: Brexit & Food

No tears for Cyprus in Brussels and Moscow

China is building 8 new airports a year

FEATURE: Niger’s girls find sanctuary in fistula treatment centres

COP21 Breaking News_03 December: Unprecedented Global Alliance for Buildings and Construction to Combat Climate Change

A geared turbofan at Pratt & Whitney's production hub in West Palm Beach (copyright: Pratt & Whitney - a UTC Company- 2018; Source: Pratt & Whitney's website, media center)

The EU Commission approves UTC’s acquisition of Rockwell Collins under conditions

How bad could British healthcare get for its citizens abroad post-Brexit?

Cancer research put at risk by General Data Protection Regulation? The possible dangers of a data privacy EU mania

Teenage girl’s death sentence spotlights Sudan’s failure to tackle forced marriage, gender-based violence – UN rights office

Greece and Ukraine main items on EU28 menu; the course is set

Diversity training doesn’t change people’s behaviour. We need to find out what does

Let Nagasaki remain ‘the last city’ to suffer nuclear devastation says museum director, as UN chief arrives

UN Environment Assembly 2017: where the world convenes to #BeatPollution

European Parliament calls on Russia to end occupation of Georgian territories

France sneaks into the Geneva US-Iran talks to claim its business share in Tehran

Europe provides financial support to African countries while Turkey denies to change terrorism laws jeopardising the EU deal

Global Citizen-Volunteer Internships

‘Much more’ can be done to raise awareness about the plight of persons with albinism: UN chief

Rule of law in Hungary: Parliament should ask Council to act, say committee MEPs

“There are many converging visions and interests between the One Belt One Road initiative and the Juncker Investment Plan”, Ambassador Yang of the Chinese Mission to EU highlights from Brussels

The EU launches € 1 billion plan on supercomputers and tries to catch-up with competitors

The EU threatens to occupy Libya militarily; is another colonial war brewing?

Ukraine turns again to the EU for more money

How will the EU face the migration crisis when the Turkish threats come true?

Disintegrating Tories will void May’s pledge for Brexit deal in seven weeks

Is the West gradually losing Africa?

Devastating storms like Hurricane Florence ‘unusual this far north’: UN weather agency

How civil society must adapt to survive its greatest challenges

What washing your hands can teach you about global change

EU countries invested €5 trillion abroad

Why Microsoft is a regular to Almunia’s

AIESEC @ European Business Summit 2015: The power of an individual and how we can awaken Europe’s Youth

Where are people most proud to be European?

Brussels terrorist attacks: Schengen in danger once again while leaders gather Europe’s multiple broken pieces

Can the world take the risk of a new financial armageddon so that IMF doesn’t lose face towards Tsipras?

Paris agreed with Berlin over a loose and ineffective banking union

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