What sort of taxation for the “post-Covid world”? This was the question that several experts from around the world asked themselves on Thursday 28 May at an online workshop jointly organised by the Financial Transparency Coalition (FTC), the Independent Commission for International Corporate Tax Reform (ICRICT), Oxfam, and Public Services International (PSI).
The participants were asked about the fiscal measures to be taken to respond immediately to the consequences of the economic crisis caused by Covid-19, and it is clear that digital taxation was on everyone’s lips.
On Wednesday, the European Commission itself turned it into a possible new source of own revenue (see EUROPE 12494/1), which it said could bring in around €1.3 billion a year.
At a press conference on the same day, the European Commissioner for Taxation, Paolo Gentiloni, recalled that the Commission still prefers that an international solution be found at the OECD, but that if this fails, it would not hesitate to take up its proposals at the European level (see EUROPE 12212/6).
For Susana Ruiz, head of tax justice advocacy for Oxfam, countries cannot afford to wait for an agreement at the OECD given the urgency. They should adopt national taxes as soon as possible so that they can raise new revenue this year. Even if an agreement was indeed reached by the end of 2020, it would take at least 3 or 4 years for it to be implemented, she reiterated.
According to Wayne Swan, former Deputy Prime Minister of Australia and member of ICRICT, the crisis is indeed pushing more and more governments to consider national taxes on digital services, because they are immediate sources of revenue, but also because digital companies have emerged largely winners from the crisis.
Digital taxation was also put forward by Logan Wort, executive secretary of the African Tax Administration Forum (ATAF), who nevertheless lamented that the OECD Inclusive Framework, where reform is being negotiated, is not that inclusive, and that the agenda often favours developed countries.
According to Rosa Pavanelli, General Secretary of PSI, capturing hidden wealth in tax havens and setting unitary taxation for multinationals would also provide the resources needed to recover from the crisis and, at the same time, remedy dysfunction in the health system.
Jayati Ghosh, who teaches at Jawaharlal Nehru University in New Delhi and is a member of ICRICT, argued for a “multicoloured Global New Deal” that requires unitary taxation of multinational companies and a wealth tax to simultaneously reduce inequality and finance the recovery.
What about a global tax on excess profits?
Allison Christians, who teaches at McGill University in Montreal, presented a completely different solution: a ‘Global Excess Profits Tax’.
The proposal could, she said, be Pillar III of international tax reform at the OECD, as it combines the two current pillars of reform, by first separating so-called ‘normal’ and ‘excess’ profits using country-by-country reporting (CBCRs) from large companies, and then by setting a rate and assigning cascading tax rights, she explained.
This is an “excellent proposal”, according to Rajat Bansal of the Indian Ministry of Finance, who nevertheless remained sceptical about the political feasibility of reaching an agreement on Pillar III when discussions are already complicated on Pillar I (see EUROPE 12492/25) of the reform. (Original version in French by Marion Fontana)