From the 1970s, the opening up of economies and the rise of free trade policies gradually strengthened the reign of globalization. However, economic and financial globalization has been negotiated and implemented without considering the problem of international tax competition and, by the same token, without a global pact having been concluded to guarantee the responsibility of multinationals in this regard. .
Forty years later, under the leadership of the Organization for Economic Co-operation and Development (OECD), the great leaders of global tax reform are trying to finish the job. They have achieved the impossible: the conclusion of a Declaration which establishes a new framework for the reform of international taxation, i.e. a global minimum tax of 15% agreed by 136 countries and jurisdictions where 90% of the activity is carried out global economy.
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Historic reform
This global minimum tax is a historic reform that changes the basis of international taxation and marks the course of globalization by initiating a movement that could put an end to tax competition between countries.
This tax reform is undoubtedly a great success. But like any reform, it is a process which, for the moment, is still incomplete.
A third of the countries have not yet agreed to join the initiative, so nearly 2 billion people are excluded from the agreement.
Also, while we are putting in place this global minimum tax, let us now think about the climate crisis in order to prevent future generations from having to complete our work in turn.
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COP26: “The climate negotiations were built on a naive vision of the world”
Planet Earth, our home, is now facing a global climate crisis, coupled with a loss of biodiversity, the effects of which will worsen at breakneck speed in the decades to come. Water scarcity, the drop in crop productivity, the silting up of land and the rise in sea level will lead, every year, tens of millions of climate migrants to leave their place of life in order to seek a viable space either in their own country or in another country.
Several of the countries that have yet to adhere to the global minimum tax – including the Philippines, Pakistan, Nigeria, Sri Lanka, Sudan, Yemen, Zimbabwe, Madagascar, Mozambique, Myanmar, Kenya and Fiji – are already grappling with an environmental emergency. . If the global minimum tax addressed the challenges of the climate crisis, it would perhaps be a major incentive to convince non-signatory countries to join the pact.
Taxation and environmental cause
It has become essential to coordinate, at the global level, the answers to the problems which arise at the level of the planet. Environmental challenges will affect public finances in the near future. So, within the framework of the current international reform, is it not desirable to already think about its potential impact to face the climate crisis? For example, by allocating 1% of global minimum tax revenues (estimated at $ 150 billion per year) to the creation of a global fund for climate refugees, part would already be dedicated to a situation which requires public investment and international aid.
In addition, the experience gained in setting a global minimum tax, negotiated and approved in just three years, could inspire discussions for a global taxation of greenhouse gases (GHGs).
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One thing is certain: there is less and less justification these days for the world’s great leaders to meet in Rome to discuss global tax reform and in Glasgow to discuss the climate crisis, with no junction between them. two initiatives. To preserve humanity, we must rethink all economic and social measures from an ecological perspective. And any new idea, especially fiscal, must examine the possibility of serving the environmental cause.
Brigitte Alepin is a tax expert, professor of taxation at the University of Quebec in Outaouais, author, filmmaker and co-founder of TaxCOOP;
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Hon. Louise Otis is president of the administrative tribunal of the OECD and of the appeal tribunal of the OIF, member of the group of experts whose mission is to overhaul the internal justice of the United Nations, creator of a transitional justice system for countries affected by armed conflicts or environmental disasters and co-founder of TaxCOOP.
