G20 Finance Officials Meeting: US Global Minimum Tax Plan and COVID-19 Measures
G20 finance officials are set to back a $650 billion boost to the IMF’s emergency reserves along with a debt payment freeze as an attempt to help developing countries deal with the consequences of the COVID-19 pandemic.
The virtual meeting was also marked by the US’s initiative to agree on a minimum global corporation tax rate. G20 finance ministers and bank governors have concurred that they should reach an accord for a global minimum corporate tax rate by the middle of 2021.
The Biden administration’s global tax minimum received support from Germany, Japan, and France, which could speed up this monumental agreement. Aside from these countries, the European Commission also supported the proposal, which would finally see IT corporations contributing their honest share.
“I’m in high spirits that with this corporate taxation initiative, we’ll manage to put an end to the worldwide race to the bottom in taxation,” said Olaf Scholz, Germany’s minister of finance.
The tax rate is also to be negotiated among a group of around 140 countries to reach an agreement which is meant to disincentivize multinational companies from relocating their profits to tax havens.
The IMF’s positive forecast of 6% global growth was reflected by many countries’ economies rebounding from the effects of COVID-19. However, experts warn that the pandemic is jeopardizing current efforts to deal with poverty.
“We have no way to get through without pulling together,” said Kristalina Georgieva, IMF Managing Director, reiterating that richer countries need to help less fortunate countries with vaccination efforts.
According to economists and experts, expanding the IMF’s emergency reserves should help with liquidity for all member countries without adding to existing debts for countries at risk of a debt crisis.
Some of the other issues addressed at the meeting related to protectionism in world trade and efforts to deal with climate change.