PES welcomes G20 finance ministers’ backing for landmark global tax deal

PES welcomes G20 finance ministers’ backing for landmark global tax deal

Under the current proposals, global behemoths like Google, Amazon, Facebook, and Apple – companies that have paid far too little tax for far too long – will pay tax where they make profit, with a corporate tax rate of at least 15%.

The plan was supported by finance ministers from the G20 – whose members account for more than 80% of world GDP and 75% of global trade – at a two-day meeting in Venice, Italy, last week.

PES President Sergei Stanishev said:

“When companies globalise profit, the answer is to globalise tax. That is how we make sure globalisation is fairer for our communities.

“The impact of this deal will be seismic. By finding unprecedented agreement among the world’s largest economies, we can move the needle firmly towards global tax justice.

“European socialists and social democrats have been pushing for this for many years. German Vice Chancellor Olaf Scholz, European Commissioner Paolo Gentiloni and other progressives have led the way. Without them, this historic deal would not be on the table.

“Whilst this proposal is global in its scope, its effects will be local. If agreed, the world’s wealthiest companies will no longer be able to negotiate minuscule tax rates that rob government of the revenue needed to run society. It will mean more money for our communities, better public services and a stronger recovery. We want to see G20 leaders give the green light to a strong deal in October, with a corporate tax rate of at least 15%.”

The two pillars of the global corporate minimum tax rate proposal ensure the international companies pay taxes in countries where they make profits, rather than in low-tax jurisdictions, and set a minimum level of corporate tax globally, so that tax competition between governments does not develop.

Earlier this month, the PES Financial and Economy Network called for progress on international taxation to solidify into an international tax deal. Last month on the eve of the PES conference With Courage. For Europe. in Berlin, the PES Presidency adopted a declaration –  Fair global tax rules – setting out the progressive political family’s shared vision for a fair international tax system.

The PES has long advocated for reform of global taxation rules, which are clearly outdated. The coronavirus pandemic has only increased the urgency of these reforms, which are needed so governments worldwide can collect revenues to fund health systems and to repair the social and economic inequalities which the COVID-19 crisis has exacerbated.