TTreasury Secretary Janet Yellen will discuss the formation of a global minimum tax during a meeting with G-20 finance chiefs this weekend in Venice.
Yellen will travel to Europe to participate in G-20 meetings on Friday and Saturday, which aim to strengthen multilateral engagement for a world minimum tax, express support for climate change initiatives and address the global economic recovery from the COVID-19 pandemic, senior Treasury officials said on a Tuesday call with reporters.
On Sunday, Yellen will deliver a keynote address at the Venice International Climate Conference with his G-20 counterparts before traveling to Brussels with the aim of strengthening the country’s transatlantic economic relations with the European Union and meeting the Eurogroup.
The meeting comes just days after 130 out of 139 countries of the Organization for Economic Co-operation and Development agreed to a global minimum tax of at least 15%, a deal the White House called historic. While the deal is only in outline, the world’s largest countries are expected to determine the details of the proposal over the coming months.
When asked whether the exact global minimum tax rate, which has yet to be calculated, should be traded slightly upward from the 15% level, a senior Treasury official said the United States don’t expect there to be a precise rate decision in the coming week. Instead, the official said he expects this aspect of the plan to develop in the next phase of negotiations after Yellen’s meeting with other finance ministers this weekend.
Another Treasury official claimed that the global minimum tax is a way to make globalization fairer for working people and the middle classes, not only in the United States but also in other countries. The administration has repeatedly called the current international tax system a “race to the bottom” that makes countries compete for lower corporate tax rates.
âFor decades the United States has participated in self-defeating international tax competition, lowering our corporate tax rates only to see other countries lower theirs in response. The result was a race to the bottom on a global scale: who could lower the rates of their companies more and more quickly? No nation has won this race, âYellen said of the plan.
Regarding the legislative aspect of the implementation of a global minimum tax, Yellen began speaking with the chairs of the Ways and Means Committee and the Finance Committee about the provisions of the draft. reconciliation law that would align with the goal of a global minimum tax.
Since the current agreement is broad in nature, the United States will also need to engage China and other countries on how the plan should be implemented. Before the announcement that China was among the OECD supporters, French Finance Minister Bruno Le Maire said that putting in place an effective global minimum tax “is going to be a tough fight.”
Another major issue that should be addressed at this weekend’s meeting is global access to COVID-19 vaccines. For example, while nearly 60% of American adults are fully vaccinated, India, which saw a massive spike in cases and deaths in May, has only 5% of the country fully vaccinated. President Joe Biden has pledged to donate 580 million doses by June 2022 and has developed a global COVID-19 framework.
A senior Treasury official said the United States would urge its global partners to avoid withdrawing prematurely from a fiscal stimulus given the pandemic and other issues affecting the world. The official said countries should invest money in economic recovery efforts and pointed to the spending programs proposed by Biden.
During this weekend’s meeting, attendees, who represent the world’s largest carbon emitters, will also discuss climate change targets and how to implement emission reduction measures in line with the ‘Paris Agreement.
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Original author: Zechariah Halaschak
Original location: Yellen to push for global minimum tax at G-20 meeting in Europe