Companies should willingly pay tax wherever they generate profits — this column has long argued — because it’s fair they should contribute to the cost of the public services on which all business ultimately relies, and because the reputation of capitalism as a whole is tainted when corporate tax bills are reduced to absurdly low levels by the use of offshore domiciles and spurious royalty payments that most governments lack the willpower to challenge. So I welcome at least one half of the G7 finance ministers’ agreement last weekend on a new global corporate tax regime.
The half I’m ready to praise is the proposal that all countries should have the right to tax some of the locally generated profits of the world’s largest multinationals. That would begin to address shameless tax–minimising practices deployed in the UK over the past decade by the likes of Amazon, Facebook and Starbucks.
The half I’m unpersuaded by is a global minimum corporate tax rate of 15 per cent. Reduced from President Biden’s ranging shot of 21 per cent and far below levels advocated by anti-capitalists such as Thomas Piketty, this hurdle, if ever agreed, would — most experts say — have the effect of raising significantly more revenue for the US Treasury but piffling sums over here, while making pariahs of the likes of Ireland that use low corporate taxes as a legitimate tool of economic development through inward investment.
In brief, there’s a long way to go and much refinement needed before this new tax pact makes the world a fairer and better place. But international co-operation is always and everywhere a good thing — and we should at least welcome America, the kingpin, back to the table.
Used-car disruptor
My man on the forecourt tells me the three-year-old Audi he sold me last year — a diesel automatic I call ‘the fat cruiser’ — is worth a couple of grand more than it was then, even with an extra 5,000 miles on the clock.
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