Monday Morning Moan – Britannia Digital Service Tax Rule? Joe Biden might not agree …
Hooray! In one leap, the problem of fair taxation of digital giants has been solved and the likes of Facebook, Amazon and Apple are tamed once and for all!
Or at least that’s what the mainstream media have been telling me since late last week when, in the run-up to the next G7 gathering in the UK, Finance ministers have – it is said in most of the newspapers – been brought under control by UK Finance Minister Rishi Sunak, who is almost single-handedly led them to sign up to a minimum corporate tax level of 15%.
And Chancellor Sunak does not lose any opportunity to grow this “triumph”, boasting:
I am delighted to report that today, after years of discussions, G7 finance ministers have reached a historic agreement to reform the global tax system. To adapt it to the global digital age, but more importantly to make sure it is right so that the right companies pay the right tax in the right places and that is a huge price for UK taxpayers.
This is also great news for Sunak and the UK government’s public relations as Brexit Britain prepares to host the G7 summit in Cornwall. Prime Minister Boris Johnson will welcome US President Joe Biden and take advantage of any Global Britain photo ops he can. Sunak, meanwhile, must have arrived a bit early to make sure he was in the spotlight.
And he certainly gets help from his allies in the right-wing media. The newspaper Express, the one that supports Brexit the most, declares breathlessly that (sic):
Rishi Sunak’s “seismic” tech tax deal proves Brexit Britain is the world leader.
He continues by advancing the following line:
It also emerged that the country’s unparalleled ‘soft power’ played a pivotal role in breaking down divisions over the taxation of tech companies, with foreign finance ministers and their officials in awe of talks at Lancaster House, the mansion. London where the hit Netflix television series The Crown is filmed. .
Now why has no one thought of it before? Years and years of procrastination and selfish postures by countries keen to be seen making progress on a little Amazon bait, without actually undermining their own tax havens and foreign investment-friendly credentials, and all that. that it took in the end to get a deal in the end was a trip to see where Olivia Colman and Helena Bonham-Carter drank tea and ate cucumber sandwiches! Imagine if someone had come up with the idea for a day trip behind the scenes of the James Bond set in Pinewood, we could have fixed this thing years ago!
America (again) First
Flag chatter aside, a more serious problem is that this is not the tax deal it claims to be – it’s not a British triumph, either. It was the Biden administration that pushed the hardest for this and they initially wanted a rate of 21%, which the UK actively opposed. Lowering the rate to 15% served only a few pragmatic political ends.
The British government is allowed to assert that, given that this deal was made to coincide with the G7 meeting in Britain, it follows that it was the Johnson government that forced the Americans to come down. by 21% and managed to negotiate the international consensus.
It’s about as likely a scenario as The United Kingdom scoring over null points in the Eurovision Song Contest and it’s a narrative that won’t survive once Airforce One lands. Any doubt that Biden is about to allow someone else to take the credit for it can be safely dispelled by the opinion piece he “wrote” for the Washington Post this weekend, headlined:
My trip to Europe is about America rallying the democracies of the world.
As Diginomica has already noted, the Biden administration may be more of a globalist nature, and it’s a relief for many of us after four years of Trumpian dogma, but the idea that any the administration in Washington is not going to act out of self-interest for its own people is naive in the extreme.
One of the problems with the new tax proposals is that while the idea is to remove the incentives for multinationals to shift their profits overseas to save tax, the profit goes to the country where the headquarters are located. social – and in the case of the global digital tech giants, that would be… No wonder Biden is enthusiastic.
And he is not alone. Facebook chief apologist Nick Clegg gave Sunak’s “triumph” a big “Like” – and frankly, if that’s not enough to chill the Chancellor’s blood and send him back to his sums to see what he missed, I don’t know what is. Clegg says:
Facebook has long called for reform of global tax rules and we welcome the significant progress made in the G7. Today’s agreement is an important first step towards providing certainty for businesses and building public confidence in the global tax system. We want the international tax reform process to be successful and recognize that this could mean Facebook is paying more taxes, and in different places.
Well if Nick says Zuck and Co all agree, then that’s fine with me. It is clearly for the greater good of all of us. Oh and by the way, with all of this extra tax revenue we’re going to generate, can I get anyone interested in buying the Sydney Harbor Bridge? I will give you a good price!
Peace in our time
You know, holding a piece of paper that promises peace in our time in their hands has never been a good look for British politicians, but it’s understandable that Sunak – and inevitably Prime Minister Johnson is joining us – on do. Sunak inherited a big problem in the form of the UK’s unilateral digital services tax (DST), which has come down in Washington as well as a cup of the common cold. Under Trump, this was seen as an attack on American businesses; under Biden, at least that hasn’t changed – and it’s not useful when you have to get a trade deal with Washington at pretty much any price.
You may not have noticed it, but the US government last week imposed a bunch of tariffs on goods and services from the UK in retaliation against the DST. He then put them on hold a few minutes later, in order to help the British think about what should happen next, rather how the Mafia is keen to let you draw your own conclusions about what is best to do. if you like to have a knee. caps.
Achieving this 15% consensus allows Sunak to move away from the DST and save the political face, which is now also an escape route for France, in reality the most active – and unnecessarily belligerent – supporter of the action. to impose a Europe -wide DST.
Of course, none of this matters anyway. The G7 summit will take place, declarations of triumph will be made, photos will be taken, everyone will go home and then… what? Well, what will happen is that that 15% idea will eventually go to the G20 summit in Spain later in the year. If approved there, it will then be presented to the 37 members of the OECD (Organization for Economic Co-operation and Development), where it is likely that they will make all the right noises in public and fight like a bunch of cats. . In the wings.
So for any country that might be less than enthralled with the idea of a 15% corporate tax when it already offers a more attractive lower rate – hey Ireland! – maybe it’s worth keeping the schtum for now and seeing if it all falls apart on its own. Will India register? Will China register? Singapore? Switzerland? What if they don’t?
Last word to British Chancellor Rishi Sunak:
I hope people are proud that the UK has stepped up and done this.
Well, make the most of the beautiful photos, Rishi. I sincerely want to wish him good luck. The problem of obsolete taxation is real and it needs a comprehensive solution that is achievable and enforceable.
Unfortunately, I’m afraid this is a classic example of “something has to be done; it’s something; it must be done! ‘