Achi news desk-
Paris, (APP – UrduPoint / Pakistan Point News – 29th Mar, 2024) The French government is under pressure from the opposition and its allies to tax the rich to reduce the country’s yawning budget deficit.
President Emmanuel Macron’s government says it likes the idea, but only if it is done at the international level.
There have been a number of initiatives in recent years, but progress has been slow.
Tax rich multinationals: via the OECD
More than 140 countries agreed at the end of 2021 to set a minimum tax on multinational companies under the auspices of the OECD, to combat attempts by companies to shift profits to countries with low rates.
Two years later, there has been only limited progress.
One pillar of the reform, a global minimum rate of 15 percent, was implemented on January 1 by several countries, including the European Union. Others like the United States are yet to act.
With the United States mired in a presidential election year, little legislative progress is expected.
According to the OECD, this tax reform would bring in an additional $200 billion in revenue per year.
Meanwhile nations have not yet reached an agreement on the other pillar, with the aim of a fairer distribution of the tax revenue of multinational companies, especially US technology giants.
As the process drags on doubt has grown, with Italian Finance Minister Giancarlo Giorgetti recently expressing his “fear that the attempt to move towards fair taxation for international companies on a global level will be a founder in the impossibility of completing the work”.
Tax the super rich: through the G20
Brazil, which chairs the G20 this year, called on the group of nations that account for 80 percent of the world’s economy to adopt a joint stance on preventing billionaires from paying tax by July.
The French Finance Minister, Bruno Le Maire, spoke publicly in favor of a minimum tax on the rich.
There are no details yet on what such a tax would look like, with studies ongoing, and it is not clear how many G20 nations would support the measure.
“The fact that these people (billionaires) pay very little in tax has become increasingly evident over the years,” French economist Gabriel Zucman told AFP.
Zucman, a 37-year-old former protégé of renowned economist and inequality expert Thomas Piketty, was invited to outline his research on tax evasion by the super-rich finance ministers of the G20 in February.
Given that there are about 3,000 US dollar billionaires worldwide, a two percent wealth tax would generate about $250 billion in additional tax revenue worldwide, according to his calculations.
Plug tax loopholes: United Nations
An even more ambitious project is to harmonize rules globally to close the loopholes that allow the rich to avoid paying taxes, with a proposal by Nigeria to create a UN tax convention gaining support at the UN this month last november
Supporters say the UN is a better forum to promote the reform.
It involves almost every country globally, while the OECD process “is not inclusive, transparent and the club of rich nations decides the new rules,” said French economist Lucas Chancellor, expert on inequality.
But there are a number of challenges including huge differences in tax rates between nations, while the United States and the European Union are skeptical about the initiative.
“Will global corporations oppose it? Yes, of course. Wealthy individuals? Absolutely!” says Indian economist Jayati Ghosh.
“It is really a question of whether the greater good of humanity and the planet will be able to win over the benefit of private profit,” he said.
