Corporations love keeping their shareholders money instead of contributing to society, and it’s the role of governments to ensure that corporations do their part. Usually this comes in the form of taxation. Multinational corporations create multiple subsidiaries to obfuscate and obstruct the ability of governments to collect tax, it’s the corporate equivalent of dining and dashing.
A recent G7 meeting revealed that the largest economies in the world are going to enact a global minimum taxation rate for corporations. Having an agreed-upon minimum will remove the incentive to corporations to create subsidiaries to avoid taxation, while increasing the wealth of nations.
The rules on making multinationals pay taxes where they operate – known as “pillar one” of the agreement – would apply to global companies with at least a 10% profit margin.
Twenty percent of any profit above that would be reallocated and taxed in the countries where they operate, according to the G7 communiqué.
In the case of the UK, for example, more tax revenue would be raised from large multinationals and would help pay for public services.
The second “pillar” of the agreement commits states to a global minimum corporate tax rate of 15% to avoid countries undercutting each other.
Short-term thinkers who put quarterly profits above all else consistently argue that caring for the environment destroys business. They are wrong. The evidence keeps growing that planet (and people) friendly policies encourage economic growth while also forcing companies to increase their efficiency. It’s a win-win for businesses and the planet.
An Italian team of economists have concluded that by taxing companies, and individual behaviours, that damage the environment create great success for the planet and profits.
Green taxes, or taxes levied on businesses and individuals in order to promote environmentally friendly practices, had the largest impact on multifactor productivity, though De Santis and her colleagues wrote that green taxes need to be paired with complementary redistributive policies, such subsidies and grants for companies transitioning to environmentally friendly practices, in order to avoid damaging productivity.
“What is clear is that you have to face this increasing environmental policy stringency, and as a firm, probably the best is if you try to create this win-win solution so it’s passed through an improvement in technology,” De Santis said.
Historically, the International Monetary Fund (IMF) argued for lower taxes for everyone, particularly those that need it the least: the wealthy. Due to increases in multiple forms of inequality since the last global recession the IMF has changed its tune. The institution now calls for countries around the world to implement a wealth tax while lessening the financial burden on workers through tax breaks. They argue that by doing so we can fend off a global depression.
For individuals, the IMF encouraged slashing payroll taxes as well as cash transfers to help those hardest hit with job losses or other circumstances.
The IMF’s recommendation for a wealth tax marks a stark turnaround for an institution that long pushed tax cuts as a central element of its policy menu for developing nations. It serves as a lender of last resort to countries in dire financial straits.
British Columbia shows carbon pricing works while another province looks uselessly backwards.
The regressive and antidemocratic Ontario “conservative” government is set to sue the Canadian government for protecting the environment. The argument by the Conservatives is basically that an economy allowed to inefficiently consume non-renewable resources is good and that sustainable policy (carbon pricing) is bad. Yes, it’s as ludicrous as it sounds.
Hopefully this wasteful battle between governments ends in the environment’s favour. If Ontario just followed British Columbia’s lead this wouldn’t be an issue and arguably the economy would be in better shape. In B.C. the carbon pricing has reduced emissions while making a more energy efficient economy. Sustainable businesses are seeing growth in B.C. that they wouldn’t see elsewhere.
“This carbon tax is a model for the world that well-designed carbon pricing can be good for the environment and the economy. In the 11 years since B.C. brought in its carbon tax, it’s outpaced the rest of Canada both on emission reduction and GDP growth,” said Stewart Elgie, a professor of law and economics at the University of Ottawa.
In the meantime, numerous researchers have tried to determine the impact of the tax. According to a2015 paper, B.C.’s emissions had dropped by between five and 15 per cent since the tax was implemented, and it had a “negligible impact” on the overall economy.
Elgie, of the University of Ottawa, was part of awide-ranging 2013 studythat showed a 19 per cent drop in B.C.’s per capita fuel consumption in the first four years of the tax, while the province’s economy slightly outperformed the rest of the country.
Tax evasion is a problem in every country and it’s up to teams of investigative journalists to expose mass illegal international operations. A few years ago the Panama Papers exposed an efficient tax dodging operation by a large group of wealthy people. The results of the exposure from the Panama Papers has led to millions being collects in countries with more results coming in.
Not only did the Panama Papers catch a bunch of criminals it also proves investigative journalism works.
More than a dozen people are in prison or awaiting sentencing in Ecuador, the United States and Panama for their roles in a bribery scheme at the Ecuadorian state petroleum company that was exposed in the huge document leak.
In South Korea, the leak led to bribery indictments against a former army general and a former executive of a major defence company.
And in Pakistan, former prime minister Nawaz Sharif has been serving a seven-year sentence after the Panama Papers revealed assets his family had hidden overseas. He is appealing his conviction, calling the charges against him politically motivated.