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

Investing in rural women and girls, ‘essential’ for everyone’s future: UN chief

‘Stand united against anti-Muslim hatred’ urges Guterres, after mosque shootings in New Zealand leave 49 dead

Erasmus+ will finance existing UK-EU mobility in the event of no-deal Brexit

Despite progress towards peace, Afghanistan facing ‘daunting challenges’ ahead of presidential vote

Brexit effect: Public opinion survey shows that EU is more appreciated than ever

Why the Greeks forgave Tsipras’ pirouettes around austerity and voted again for SYRIZA

A Sting Exclusive live from Brussels: Solheim’s consequential visit leading the world and the UN

Is ECB helping Germany to buy cheaply the rest of Europe?

This new way of understanding disease is changing medicine

Britain offers more money for an orderly Brexit but the Irish question resurges

Crimea, a wicked game of political chess and a ‘big’ coincidence

Indonesia: Psychological impact on earthquake survivors turns villages into ‘ghost towns’

“If the job market doesn’t exist, then even the most brilliant Youth Guarantee cannot ensure a job to these young people”, European Youth Forum Secretary General Giuseppe Porcaro on another Sting Exclusive

Tax Inspectors Without Borders making significant progress toward strengthening developing countries’ ability to effectively tax multinational enterprises

Youth policy in Europe not delivering for young people

Superbugs: MEPs advocate further measures to curb use of antibiotics

The Commission unsuccessfully pretends to want curbing of tax evasion

Western Balkans: European Parliament takes stock of 2018 progress

MEPs demand end to EU arms exports to Saudi Arabia

Chatterbox Rome Declaration cannot save the EU; Germany has to pay more to do that

CLIMATE CHANGE FOCUS: Cows, coffee and sustainable farming

Trump-China trade war lingers upsetting global economy and stock markets

Theresa May in search of a magic plan to invoke Article 50 and start Brexit negotiations now

Brussels wins game and match in Ukraine no matter the electoral results

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

The psychology of pandemics

Safer roads: More life-saving technology to be mandatory in vehicles

One Day in Beijing

Europe’s poor investment in digital is threatening prosperity. Here’s what its start-ups need

“For my children Italy will be an innovation lab and not a museum”; the Sting reports live from World Economic Forum 2015 in Davos

EU tells Britain stay in as long as you wish

The future of science could be in your gut. Here’s why

Africa’s Sahel must be a top priority for UN peacebuilding efforts, says commission

First-ever global conference of national counter-terrorism chiefs will strengthen cooperation, build ‘resilient’ States, says top UN official

Google’s bare truth: Europe’s Chief denies EU accusations but admits they “don’t always get it right”

Facebook: MEPs demand a full audit by EU bodies to assess data protection

We need to rethink neuroscience. And you can help us

Newly displaced fleeing attacks in northeast Nigeria, top 2,000

How can newspapers survive? By measuring their social impact

Trump enrages the Europeans and isolates the US in G7

Ten UN peacekeepers killed in a terrorist attack in northern Mali

‘Forgotten crisis’ in Cameroon, with attacks on the rise, millions in need of ‘lifesaving assistance’

Macron crowned king of Europe in Washington D.C.; just a working meeting with Trump for Merkel

Is it true that the G20 wants to arrest tax evasion of multinationals?

Robot inventors are on the rise. But are they welcomed by the patent system?

European Business Summit 2014: The role of youth entrepreneurship education in EU’s Strategy for Competitiveness

China Unlimited Special Report: at the heart of Beijing

‘Stealing’ food from hungry Yemenis ‘must stop immediately’, says UN agency

“Prevention is better than cure”: the main goal of modern medicine

A silent killer: the impact of a changing climate on health

A health approach to climate change

UN chief ‘alarmed’ by violations of UN-backed ceasefire in Libya

The Government of China and UNIDO partner to develop technical guidelines for standards of small hydropower development

EU budget: Boosting cooperation between tax and customs authorities for a safer and more prosperous EU

UN chief condemns explosion at election rally in Zimbabwe that injured dozens, including senior politicians

China’s cities are rapidly becoming more competitive. Here’s why

Are we at the edge of anti-vaccination health crisis?

The great challenge of the 21st century is learning to consume less. This is how we can do it

Let us keep ‘their spirit of service alive’: Guterres leads tributes to UN workers who died in Ethiopia crash

Jeroen Dijsselbloem new Eurogroup president

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