Finance ministers of the Group of Seven Rich Nations (G7) will vow this week to help their economies overcome the pandemic and to reach an “ambitious” deal on a global minimum corporate tax in July, according to a draft communique.
G7 officials, who will meet in London June 4-5, will also say that once the recovery is well established, they will need to “ensure the long-term sustainability of public finances” in what is a code of phased withdrawal is understood of the stimulus.
The G7 includes the United States, Japan, Great Britain, Germany, France, Italy and Canada.
“We pledge not to withdraw political support prematurely and invest to promote growth, create quality jobs and combat climate change and inequalities,” reads the draft communique viewed by Reuters.
“Once the recovery is firmly established, we need to ensure the long-term sustainability of public finances to respond to future crises,” the draft says, without specifying how the G7 would rate the recovery as firm.
G7 governments have pumped trillions of dollars into their economies since the pandemic began in March 2020 to keep them alive as repeated lockdowns have pushed the world into deep recession.
To ease the burden on public finances, the draft states that the G7 strongly supports the Organization for Economic Co-operation and Development (OECD) efforts to set a global minimum corporate tax rate that would ensure that large multinational corporations earn their money Pay fair share of taxes.
Such a tax would aim to solve the problem of large corporations that generate huge revenues but pay very little tax because they set up offices in low-tax areas for tax purposes.
The solution the OECD is working on would enforce a global minimum tax on all corporate revenues, regardless of where a company is headquartered for tax purposes.
“We are committed to a fair solution in the allocation of taxation rights and to a high level of ambition in the rate of a global minimum tax,” says the draft, without giving any figures.
The United States proposed setting the minimum tax at 15% in early May, up from the 21% it proposed in April, and the lower tax rate seemed to be quickly gaining widespread support in Europe.
“We … look forward to reaching an agreement at the meeting of G20 finance ministers and central bank governors in July,” the G7 draft reads.
It said there was an overwhelming moral, scientific and economic case for ensuring widespread access to COVID-19 vaccines because the global economy would not be safe until the virus is under control everywhere.
The G7 will therefore urge the International Monetary Fund to use its funds to buy vaccines and also urge the private sector to increase its contribution.
The draft states that the G7 will also support mandatory climate-related financial disclosures by companies that provide “consistent and decision-making” information to the markets.
“We commit to properly embed considerations on climate change and biodiversity loss in economic and financial policy decision-making, including consideration of macroeconomic impacts and the optimal use of political levers such as carbon pricing,” the draft says.
The G7 would also try to vote globally on what constitutes sustainable, green investing in order to avoid confusion among investors.
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