Financial luminaries from around the globe at Wednesday’s G20 meeting in Washington, D.C. supported an overhaul of corporate taxation and committed to continued support for economic recovery, with caution to continue tightly monitoring inflation.
"We will continue to sustain the recovery, avoiding any premature withdrawal of support measures, while preserving financial stability and long-term fiscal sustainability, and safeguarding against downside risks and negative spillovers," the G20 finance leaders said in a statement.
Reuters reported that the G20 finance ministers and central bank governors also issued a communique urging that the International Monetary Fund establish a trust to funnel a $650bn (£476bn) issuance of IMF reserves to a wider array of vulnerable nations.
G20 leaders sought to provide adequate resources in response to disparities in pace of economic recovery, circumstantial vulnerability to Covid variants and vaccination rates. G20 leaders also pledged to shore up resources gaps against the pandemic, ensuring that underserved nations receive vaccines, diagnostics and other public health tools that could save lives and expedite recovery.
Tax reforms, strengthened supply chains
This week’s G20 activity came as the IMF and World Bank were holding their annual meetings, and less than a week after 136 countries supported the Organisation for Economic Cooperation and Development’s proposal to tax multinational corporations at a minimum rate of 15%.
In all this week’s meetings, supply chain disruptions, shortages and the resulting inflation pressures were at the fore. Central banks were to continue to pursue compliance with mandates and targets, including price stability, and make efforts to work around “transitory” inflation pressures, Reuters reported that the communique stated.
Leaders from the G20 affirmed their support for the OECD proposal, and urged a set of guidelines, parameters and rules that could make it a regulatory reality by 2023. The plan also enables federal governments to implement taxation of companies who sell goods in a given country, regardless of whether or not they are headquartered or otherwise have a presence there, creating latitude in the legislative framework.
“It is a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalised and globalised world economy,” OECD Secretary General Mathias Cormann said in a statement. “We must now work swiftly and diligently to ensure the effective implementation of this major reform.”
As the world and the US in particular struggle with supply-chain bottlenecks that have diminished profits and increased inflation, US President Joe Biden’s administration has continued to work with major shipping companies, retailers and ports to reduce backlogs and quicken transit times for goods.
Wednesday the administration took what it believes will be a significant step with its announcement that UPS, FedEx, Samsung, WalMart and others would extend operating hours, and that the port of Los Angeles would join the nearby port of Long Beach in working around the clock.
“As it stands, it will neither curb profit-shifting effectively, nor provide substantial revenues to more than a handful of OECD member countries. Everyone else has been left out.” he said in a statement.
Skeptics weigh in
In both the case of the US’s measure to lubricate the flow of essential goods and holiday luxuries and that of the OECD tax plan, there are skeptics.
Some believe that current conditions have reached the point where alleviating supply-chain disruptions and shortages in a meaningful way may not even be possible until well into 2022.