Log In

Reset Password
BERMUDA | RSS PODCAST

Global tax report says 15% is not enough

First Prev 1 2 Next Last
Nobel laureate: the foreword for the Global Tax Evasion Report 2024 was written by American economist Joseph Stiglitz (File photograph)

Draconian new global tax rules are being proposed by a new research group being funded by the European Union.

The new review, the Global Tax Evasion Report 2024, has thrown cold water on the future of policies aimed at garnering more tax income from the world’s wealthiest individuals and corporations.

They have called for an increase of the 15 per cent to a 25 per cent global minimum tax for multinational corporations.

It is the latest in more than a decade of relentless attempts by the world’s most powerful countries to rake in more revenue from its tax base – especially the richest among them.

What began as the claiming of lost revenues from illegal tax evasion, re-engineered over time to include redressing the absent flow of taxable income through legal tax avoidance methods, has not been enough, according to a two-year-old group.

Tax mechanisms: the European Union Commission launched the EU Tax Observatory in 2021 as a research lab to tackle aggressive tax planning (File photograph)

The report from the EU Tax Observatory said more than 100 researchers have put together comprehensive data to analyse the progress made in fighting international tax evasion and harmful tax competition over the last decade.

They say its is the first effort at determining the effect of the international initiatives including the automatic, multilateral exchange of bank information in force since 2017 and applied by more than 100 countries in 2023 – and a landmark international agreement on a global minimum tax for multinational corporations, endorsed by more than 140 countries and territories in 2021.

They propose reforming the international agreement on minimum corporate taxation from 15 per cent to a rate of 25 per cent and remove the growing list of loopholes that they say has already dramatically weakened the measure.

They want to slap an annual tax on the world’s billionaires equivalent to two per cent of their wealth.

They also want to institute tax mechanisms against billionaires who move countries to avoid taxes, and, implement unilateral measures to collect tax from billionaires and multinational companies, should they wriggle out of the other measures, with an aim towards eventual global agreements to do so.

Further, the group wants a global asset registry to specifically fight tax evasion, and, strengthen the application of economic substance and anti-abuse rules.

The report said it partnered with tax administrations, providing a rigorous, scientific, data-driven estimate of the magnitude and dynamics of international tax evasion over a decade.

It proposes an agenda to move towards what it calls a fairer international tax system.

But the foreword by Nobel laureate, American economist Joseph Stiglitz warns: “Particularly disappointing have been the efforts undertaken under the OECD BEPS (Base Erosion and Profit Shifting) Initiative, which began with such high hopes of creating a fairer global system for taxing corporations.”

The public policy analyst, and Columbia University professor is the former chief economist of the World Bank and former chairman of the Council of Economic Advisers in the Clinton Administration.

He said: “The reportdocuments how, since that initiative was launched, the magnitude of the problem has soared and how the proposed 15 per cent minimum corporate tax rate for multinational companies – at the onset, far too low – has been made largely toothless by a series of loopholes and ‘carveouts’.

“Worse, some key issues remain wholly unaddressed. The report shows that the tax systems in major countries are, at least at the top, regressive, with the very rich paying a small fraction of their income in taxes compared to those below.

“With effective tax rates equivalent to 0 per cent to 0.5 per cent of their wealth, billionaires are proportionally taxed far less than ordinary citizens.“

The EU Tax Observatory is self-described as an independent research laboratory hosted by the Paris School of Economics and co-funded by the European Union.

When the EU Commission announced its launch in June 2021, it was described as a new research laboratory to assist in the EU’s fight against tax abuse.

The supporting statement at the time said: “Funded by the European Union, the European Tax Observatory will support EU policymaking through cutting-edge research, analysis, and data-sharing.

“The observatory will be fully independent in conducting its research, objectively informing policymakers and suggesting initiatives that could help to better tackle tax avoidance and aggressive tax planning, among other things.”

The new organisation claims unique expertise on international tax issues with a mission “to contribute to the development of knowledge and the emergence of new concrete proposals to address the tax and inequality challenges of the 21st century”.

It says it fosters a dialogue between the scientific community, civil society, and policymakers in the European Union and worldwide.

• See Related Media

You must be Registered or to post comment or to vote.

Published October 31, 2023 at 8:14 am (Updated October 31, 2023 at 2:19 pm)

Global tax report says 15% is not enough

What you
Need to
Know
1. For a smooth experience with our commenting system we recommend that you use Internet Explorer 10 or higher, Firefox or Chrome Browsers. Additionally please clear both your browser's cache and cookies - How do I clear my cache and cookies?
2. Please respect the use of this community forum and its users.
3. Any poster that insults, threatens or verbally abuses another member, uses defamatory language, or deliberately disrupts discussions will be banned.
4. Users who violate the Terms of Service or any commenting rules will be banned.
5. Please stay on topic. "Trolling" to incite emotional responses and disrupt conversations will be deleted.
6. To understand further what is and isn't allowed and the actions we may take, please read our Terms of Service
7. To report breaches of the Terms of Service use the flag icon