When businesses stand together against price erosion that renders them unprofitable, it is a crime known as price fixing. Yet when the G7 nations stand together to raise corporate taxes in tandem, neither mainstream news nor our dictionaries refer to this as tax fixing. It appears that once again, Hungary is standing as one of the last bastions in Europe, this time against the notion that sovereignty ought to be pushed aside for the sake of corporate tax fixing which the G7 is said to have reached a “historic deal” on, when they backed Biden’s proposed tax reforms. This time though, Cyprus is on their side – and is currently the only sovereign country prepared to oppose it at an EU level through it’s veto power.
EU members facing pressure and coercion from within:
Cyprus, Malta and Bulgaria are EU nations who do not support the G7 notion, as is the case with other tax havens such as The Bahamas and Dubai (UAE), however Ireland, Micheál Martin caved into G7 pressure and struck a tone similar to that of Facebook.
“It’s time to rethink taxation in Europe,” Paolo Gentiloni, European Commissioner for the economy, said in a statement. Besides G7 and OECD tax fixing, at a European level, many like Gentiloni seeks to cap the competitive advantage some nations may have from a lower, more affordable corporate tax rate. Might he be sufficiently deluded to think Malta, Cyprus, Hungary and Bulgaria could ever compete fairly against the industrial strength of Italy, Germany and France?
As the world saw before, Viktor Orbán alone could not roll back the EU open border policies – and neither will His Excellency Nicos Anastasiades be strong enough to roll back G7 tax fixing alone. Anastasiades had in fact turned to Israel since the EU could not even provide his nation with security arrangements against potential a Turkish threat. It is therefore obvious that unless a broad coalition of European countries like Hungary, Romania, Malta and Bulgaria can stand together – the G7 reality will be forced upon Europeans quite soon. Government officials from smaller nations like the Netherlands have already been swayed: Johannes “Hans” Alexander Vijlbrief is a Dutch civil servant, economist, and politician, who currently serves as State Secretary for Finance – according to him, the Netherlands supports the G7 plan to abolish tax havens. That said: no European nation or loose associates like the UK or Switzerland, has been offered a referendum on whether to actually support these drastic tax reforms.
It is therefore no wonder why the Swiss are gearing up for Swexit, after Switzerland told the EU that they are not prepared to be a milk cow: “I can feel, and I think that political observers feel it too, that the winds have changed a bit with the problems of the European Union: the whole debt crisis, excessive spending, poverty in southern and eastern parts of the European Union and many are afraid that Switzerland would be used as a milk cow that will be milked and have to pay excessive sums to finance the European Union.” (MP Thomas Aeschi).
A different interpretation of Facebook and Amazon sharing citizen revenue with G7 nations:
It can be argued that if Facebook had to play fair – by not charging small businesses for invalid clicks (which some call “ad fraud”) – that their revenue would have be substantially less. This is also the case for other Amazon who entered the pay per click market. Instead, governments across the European Union and G7 and US, all turn a blind eye and leave it for credit card providers and businesses to argue against click fraud on a case-by-case basis. This means that all those thousands of business owners who do not know how to challenge invalid activity and charges against big tech, end up paying their advertising fees – which will now be split on a bigger proportion with G7 overlords.
Taxes in a post-Trump era
Albeit that many did not like the personal style of Trump and many thinks Biden is more of a gentleman in public, the reality is that his closer alliance with the EU and G7, will help the OECD and other mechanisms to enforce tax fixing in a way that will harm smaller economies the moment sovereignty is overturned. The “single digital economy” Junker sought to raise against the US, is at least something that can be re-adjusted in a way that benefits Americans more fairly – as many American companies rejected the concept of EU VAT on digital services such as coding and social media services, sold by US companies to Europeans.
Britain Relinquishes the “Brexit” Advantage:
“G7 finance ministers have reached a historic agreement to reform the global tax system to make it fit for the global digital age,” said British finance minister Rishi Sunak. One of the few prospects for a post-Brexit and post-pandemic Britain, would have been the ability to be more competitive – however it is speeding ahead with a corporate tax hike that will seek to appropriate a quarter of all business profits when it’s new 25% tax hike becomes a reality in 2023. Using the pandemic as the ideal excuse, it will not seek to lure more businesses to the UK, but will rather seek to squeeze out more from companies already there.
Final take:
- When Janet Yellen, its treasury secretary, proclaimed that it was time to end the “race to the bottom” she did not indicate what support the G7 would lend to smaller nations who would suffer as a result of tax fixing. These nations could never compete with the military industrial complexes of G7 nations. Expanding the tax base to infinity is mainly what the current powers agree on.
- Whether or not the OECD and G7 will finally succeed at forcing smaller countries to cave in, remains to be seen. The risk for some, is just too big – while others like Cyprus who are vulnerable to national security threats from Turkey, are in a genuinely precarious situation.
- If US president Joe Biden could instead focus his efforts on reducing the number of mass murders and gun violence people face in the US, it would be a more noble effort than interfering in the tax affairs of other regimes and coercing smaller nations with different economic models to adopt that of the US and other large nations like France that is reliant on high taxes to prevent it’s polarized communities from getting out of hand.
