Finance ministers from the group of seven rich countries (G7) will pledge this week to support their economies as they emerge from the pandemic and reach an “ambitious” deal on a minimum corporate tax globally in July, showed a draft press release.
G7 officials, who are due to meet in London on June 4 and 5, will also say that once the recovery is established, they will have to “ensure the long-term sustainability of public finances”, which is interpreted as a code for a gradual withdrawal. stimulus.
The G7 includes the United States, Japan, Great Britain, Germany, France, Italy and Canada.
“We pledge not to withdraw political support too early and to invest to promote growth, create high-quality jobs and tackle climate change and inequality,” the draft statement said, seen by Reuters.
“Once the recovery is firmly established, we must ensure the long-term sustainability of public finances to enable us to respond to future crises,” said the project, without specifying how the G7 would judge the recovery as firm.
G7 governments have been pumping trillions of dollars into their economies to keep them alive since the pandemic began in March 2020, as repeated lockdowns have plunged the world into deep recession.
To help ease the pressure on public finances, the draft indicated that the G7 strongly supported the efforts of the Organization for Economic Co-operation and Development (OECD) to set an overall minimum level of corporate taxation that would ensure that large corporations multinationals pay their fair share of taxes.
Such a tax would aim to solve the problem of large companies that generate huge income but pay very little tax because they set up offices for tax purposes in low tax jurisdictions.
The solution the OECD is working on would impose an overall minimum level of taxation on all corporate income, regardless of where the company chooses to locate its headquarters for tax purposes.
“We are committed to reaching a fair solution on the allocation of tax rights and a high level of ambition on the rate of a global minimum tax,” says the project, without mentioning any figures.
The United States proposed earlier in May to set the minimum tax at 15%, down from the 21% it had proposed in April, and the lower level appeared to be quickly receiving broad support in Europe.
“We … look forward to reaching an agreement at the July meeting of G20 finance ministers and central bank governors,” says the G7 draft.
He said there was an overwhelming moral, scientific and economic argument to ensure wide access to COVID-19 vaccines because the global economy would not be safe until the virus was under control everywhere.
The G7 will therefore ask the International Monetary Fund to use its funds to buy vaccines and the private sector to increase its contribution as well.
The draft said the G7 would also support mandatory climate-related financial disclosures by companies that provide “consistent and decision-making” information to markets.
“We are committed to properly integrating climate change and biodiversity loss considerations into economic and financial policy making, including consideration of macroeconomic impacts and the optimal use of policy levers such as pricing carbon, ”says the project.
The G7 would also seek to coordinate globally on what constitutes a sustainable and green investment to avoid confusion among investors.
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