‘Unacceptable threat’ and ‘provocation’: European nations fume after US pulls out of talks on global digital tax
…from Russia Today, Moscow
[ Editor’s Note: The US pulled out of the digital tax talks with Europe when they were at the 11th hour. Gosh, might it have something to do with Trump’s election year worries?
Internet giants like Google and Facebook have avoided taxation by parking their profits in tax havens, where Ireland is the most popular rabbit hole. The company revenues are structured to pass all the profits to a “home office corporation” incorporated in a low tax or no tax country.
In this way, the countries where digital profits are generated get screwed out of any possible tax revenue, and the US corporations usually have our government defending their approach, as higher profits push up net worth and stock valuation in the stock market. Participating politicians are remembered during reelection campaigns, which is the legal way to pay bribes.
Treasury secretary Steven Mnuchin gave up the ghost when stating that the US would pick up talks “later in the year”, meaning after the election.
Trump wants the stock market as high as possible so he can take credit for that, and for good reason. Sitting presidents have almost always been reelected during good economic periods. Remembering “It’s the economy, stupid.”
The other countries wanted to wrap up the talks, as all are seeking additional revenues to deal with the Covid economic damage, so they can plan their budgets better to revive their economies, which would be good for everyone to get trade going and paychecks flowing again.
Once again, we see Trump viewing his own reelection as being at the top of his to do list. Despite the lockdown on Bolton’s book, we will still have the leaks on the juicy parts coming out piecemeal to stretch the story out longer… Jim W. Dean ]
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– First published … June 18, 2020 –
The plan to impose ‘digital taxes’ on companies like Google and Facebook has been championed by the UK, France, Spain and Italy. Paris, Rome and London have already put in place national laws on how such taxation would be effected. Talks on the issue have been held under the auspices of the Organization for Economic Cooperation and Development (OECD).
The US, in whose jurisdiction some of the biggest digital companies reside, threw the talks into disarray last week after pulling out of negotiations. US Treasury secretary Steven Mnuchin informed his European counterparts about the decision in a letter, media reports revealed on Wednesday.
“Attempting to rush such difficult negotiations is a distraction from far more important matters,” Mnuchin was cited by Financial Times as having written. “This is a time when governments around the world should focus their attention on dealing with the economic issues resulting from Covid-19.”
The recipients of the message snapped back on Thursday, saying the US was acting unacceptably.
“This letter is a provocation. It’s a provocation towards all the partners at the OECD when we were centimetres away from a deal on the taxation of digital giants,” said French Finance Minister Bruno Le Maire in an interview on France Inter radio. The organization has 37 member states, but the talks involve nearly 140 countries.
Spanish Finance Minister Maria Jesus Montero said the four European nations will not “accept any type of threat” from another country. “We are not legislating to damage the interest of other countries,” she told Cadena SER radio. “We are legislating so that our tax system is orderly, fair and adapted to current circumstances.”
In the letter, Mnuchin said the US was going to resume talks sometime later in the year and said Washington would respond “with appropriate commensurate measures” if other nations try to collect digital taxes. European nations agreed to freeze the collection while the OECD talks are underway.
The US government threatened France with tariffs on French-made goods like champagne as it was preparing to implement its digital tax last year. Earlier this month it announced a probe into countries wishing to “unfairly” collect taxes from digital giants, saying punitive action against them may be taken.
The proposed reform would impose a global minimum corporate tax rate to prevent the shift of profits to tax havens like Ireland, and would award nations some right to tax profits generated under their jurisdiction. The US indicated it may accept the former proposal, but has rejected the latter one.
Jim W. Dean is VT Editor Emeritus. He was an active editor on VT from 2010-2022. He was involved in operations, development, and writing, plus an active schedule of TV and radio interviews. He now writes and posts periodically for VT.
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