The G20 finance ministers and central bank governors meeting is set to take place in Brazil on July 25 and 26. It is reported that if former U.S. President Trump, who is considering cutting corporate income taxes, returns to office, international discussions on strengthening taxation may stall. Countries attending the meeting are working towards reaching a consensus on increasing taxes for billionaires before the U.S. election.
According to a report by Kyodo News, the G20 countries are exploring the possibility of issuing a joint declaration to implement international tax rules aimed at increasing taxes on large IT companies through a “digital tax” and establishing a common minimum corporate income tax rate. This effort is to prevent tax avoidance by IT firms and the downward competition of global corporate income tax rates. The G20 is showing a strong commitment to accelerating the formulation of these rules.
The “digital tax” initiative, led by the Organization for Economic Cooperation and Development (OECD), is making progress. In October 2021, around 140 countries and regions reached a consensus on a multilateral treaty intended for implementation. Originally aiming for signing by 2023, the process faced delays due to entrenched opposition in the U.S., which resulted in a six-month postponement. The deadline for finalizing the text, initially expected by June this year, was also pushed back.
Referring to discussions within the G20 finance ministers on seeking consensus before the U.S. election, Reuters mentioned that two Brazilian government officials expressed Brazil’s ambitions of imposing a global tax on super-rich individuals as the rotating chair of the G20.
Brazil’s proposal, drafted by French economist Gabriel Zucman from the independent think tank EU Tax Observatory, calls for a 2% annual tax on wealth exceeding $10 billion, potentially raising up to $250 billion annually from around 3000 individuals. Brazil has garnered support from Belgium, Colombia, France, Spain, as well as the African Union and South Africa.
It is seeking further support to position its proposal as a way to make the global tax system more progressive, aligning with the G20 agenda of reducing global inequalities.
Given the strong public approval ratings of former U.S. President Donald Trump, who advocated significant tax cuts for individuals, there are concerns that this may undermine the idea of taxing billionaires globally. Therefore, Brazil, as the rotating chair of the G20, has made international tax cooperation a top priority in the joint declaration.
In a report from Reuters Washington, U.S. Treasury Secretary Janet Yellen is set to attend the G20 finance ministers and central bank governors meeting in Brazil from July 22 to 27. This marks the first significant engagement between officials of the Biden administration and international counterparts since Biden’s decision to withdraw from seeking re-election and endorse Vice President Kamala Harris as the Democratic presidential candidate.
A senior official from the U.S. Treasury stated that Yellen aims to promote U.S. adoption of green energy incentives to spur growth, increase multilateral development bank loans to address climate change, and resolve debt issues in poor countries during the Rio de Janeiro G20 meeting. She will also emphasize support for Ukraine and address China’s manufacturing capacity in her remarks.
However, participants and analysts suggest that the continuity of U.S. policies following Biden’s withdrawal decision will be a key focus of concern for G20 officials at the meeting.