Who will pay for post COVID-19 recovery? The Global Pandemic, Sustainable Economic Recovery and International Taxation – by Joseph E. Stiglitz, Thomas Piketty, Jayati Ghosh, Josè Antonio Ocampo

The global pandemic has led to major structural increases in public expenditure to support health, incomes and employment. The question of who will ultimately foot the bill will need to be answered, but the economic burden must not fall disproportionately on disadvantaged groups and countries.

Reductions in corporation tax ‘to stimulate reconstruction investment’ will be neither economically effective nor socially desirable. Rather, corporate tax systems should be strengthened by accelerating truly inclusive international cooperation on base erosion and minimum rates, by making these taxes more progressive to stimulate small firms, and by ensuring effective taxation of the offshore wealth of shareholders.

The report lists five steps governments can take to tackle tax avoidance ?which has left governments with fewer resources to meet critical priorities in the wake of the pandemic? end the era of tax havens and the ‘race to the bottom’ on corporate taxation. The measures ICRICT is asking governments to take are:

  1. apply a higher corporate tax rate to large corporations in oligopolised sectors with excess rates of return;
  2. set a minimum effective corporate tax rate of 25% worldwide to stop base erosion and profit shifting;
  3. introduce progressive digital services taxes on the economic rents captured by multinational firms in this sector;
  4. require publication of country by country reporting for all corporations benefitting from state support;
  5. publish data on offshore wealth to enable all jurisdictions to adopt effective progressive wealth taxes on their residents and to be able to better monitor effective income tax rates on highest income taxpayers.
Full paper available for download here:The Global Pandemic, Sustainable Economic Recovery and International Taxation Executive summary ICCRICT Report – Press conference: https://www.youtube.com/watch?reload=9&time_continue=16&v=iTDtHUjmYAE&feature=emb_logo
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