Patrick Pilser Chronicle
The G7, then the G20, and then the OECD countries will try to agree on a minimum corporate tax rate in the coming weeks. Inspired by Joe Biden and Janet Yellen looking into all the drawers of how to finance their economic stimulus programs, like the leaders of all countries that spend more than they collectively, this discussion should be well-aimed and suggest at least a 15% rate.
At first glance, this seems like a good idea. The optimal big multinational corporations that raise taxes will find Gaffam important, eventually sharing their huge profits with the states and financing roads, schools, hospitals, infrastructure and so on …
But if we look closely, is this really a good idea, will it see the light of day, or will it turn into a paper mill or a lawyer’s fee base?
London has already moved and is demanding that the city be exempted from this tax. If the city is excluded, why Luxembourg, Geneva, La Defense, Dubai, and Clermont-Ferrand? Why is a company established in the category subject to this minimum tax when HSBC escapes?
And on what basis is this tax based? In this kind of subject, the devil is hidden in the details. Which country will understand it and how will it organize redistribution between states? The G7 and then the G20 will refer these questions to the OECD, which will record the notes and rules that make the law firms cabbage.
Finally, what is the democratic rationale behind this global minimum tax?
So far, each country and each parliament has been thinking about its budget law, examining public spending plans, analyzing the most appropriate funding, and choosing whether or not to go into debt, to balance spending or revenues, or even to increase its deficit. One of the consequences of these reflections and analyzes is the determination of the contributions requested from citizens and businesses. Each parliament votes on a finance law and decides the rates charged by its citizens and businesses. It is a democratic and transparent process, which is regularly acknowledged by citizens in legislative elections.
If a country manages its spending remarkably well, we can imagine that it only needs 5 or 10% of these costs. Why force him to collect at least 15%? Why should this restriction come from a foreign decision? How is this democracy? Who gave the United States or France the right or authority to set the minimum tax for the Netherlands, Ireland and Australia? If the parliaments of these countries vote for this minimum tax, what if their parliaments reject it, even though the fine is set at a very high rate? Are we cutting Netflix or Google? Is tax competition and the resulting emulation banned? Will Biden, a former senator from Delaware, impose this on his previous electoral base as a tax base with a corporate tax rate of $ 300, and will he now enforce the local order?
I do not feel that it comes within the respect of democratic laws and respect for the sovereignty of each country. Quite the opposite.
We can guarantee. Among the interests of the city, Boris Johnson defends well, Gaffam’s imagination and the invention of tax institutions around the world, all this will lead to very laudable declarations of intent, which give our good conscience policies, but will the sun rise in the east and set in the west?
Our political leaders will decide to clean up public spending, “trim the mammoth” and balance public accounts. No need to wait for a speech from Joe Biden or Janet Yellen …
Pilser & Associates Chairman, Consultant and Financial Marketing Expert