Current Conditions

Partly Cloudy
19.3°C

Kamloops News

THOMPSON: It's time for taxation to be simplified in Canada and around the world

July 12, 2021 - 12:00 PM

 


OPINION


It was - as I recall - breathtakingly green…almost as if hand painted by a thousand artists. I pulled my rental car off the road between Shannon Airport and Limerick…stunned by the hillsides and vales in front of me.

“No wonder the Irish call their home, ‘The Emerald Isle’,” I said aloud…despite being alone.

Today, it’s not so much Ireland’s verdant countryside that brings green to mind. It is more the €200 banknotes and U.S. hundred dollar bills…tons of them…all claimed by multi-national corporations who set up “headquarters” in Ireland simply to avoid taxes.

Dublin’s skyline somehow isn’t as quaint and romantic as it once was. Its long familiar face of old low-rise buildings and historic sites gave way nearly a decade ago to offices with familiar names and logos…Google, Twitter, FaceBook, Airbnb, Microsoft, PayPal, LinkedIn, Yahoo and on and on.

Canada and 129 other nations agreed last week to overhaul the way large multinational companies are taxed. This marks the first step toward a change in global taxing in more than a century.

The agreement proposes a global minimum corporate tax rate of 15 percent…aimed at curbing tax havens and corporate abuses of escaping fair taxation.

The Organisation for Economic Cooperation and Development - based in Paris, France - hosted the talks and said the new 15 percent global minimum corporate income tax would yield about $150 billion in new tax revenues each year. Money than today - for the most part - is split among high-paid senior executives and relatively wealthy shareholders.

The 130 nations represent about 90 percent of world’s annual Gross Domestic Product…the market value of all final goods and services produced in a given year. So, getting 130 countries - some world powers, some not - to agree on anything beyond the shape of the conference table is a breakthrough milestone.

Eventually, an agreement would shift taxing rights on more than $100 billion of profits to countries where the profits are earned for the aforementioned multi-national companies. It’s a step in the right direction…but a short step at best…and certainly predictable given that wealthy shareholders and executives pretty much dictate taxation policies in almost all 130 countries.

You see, the fair global corporate  minimum income tax…based on what individuals - typical wage earners - pay…should be about 25 percent, not 15 percent. But, the good news is any global minimum tax means multinational corporations can no longer pit one country against another in a bid to push down tax rates.

Perhaps U.S. President Joe Biden almost said it best: “They will no longer be able to avoid paying their fair share by hiding profits generated in the United States, or any other country, in lower-tax jurisdictions.”

It’s still not their fair shares.

The 130 countries hope to reach agreement by October…with the new rates in effect by 2023. But before everyone starts celebrating the half-step improvement…nine countries didn’t sign the initial agreement…and go ahead and guess…yes, they are the low-tax EU members Ireland, Estonia and Hungary, as well as Peru, Barbados, Saint Vincent and the Grenadines, Sri Lanka, Nigeria and Kenya.

Time for the U.S., Canada and other more powerful nations to use their clout and basically force these renegades to play by the rules everyone else plays by. I wondered how 130 nations could agree on a 15 percent global minimum corporate income tax so, well, easily.

After researching some, it’s pretty obvious: the new milestone tax rate is less than the current average worldwide tax rate of 23.85 percent! So, that’s why 25 percent - not 15 percent - makes sense. That way we would actually accomplish the objective of everyone - read corporations - paying their fair share.

How do these bogus agreements happen? Well, the same relative wealthy, powerful people in charge are making the rules. And like politicians in the U.S., Canada and 128 other countries…they make it look like they’ve really done something for the people - working folks - rather than themselves.

You see, if you haven’t already done the math…that $150 billion in new tax revenues with 15 percent global minimum corporate income tax would balloon to $250 billion.

Again, it’s about fairness. Do you know why we can’t lift people everywhere out of poverty? It’s not the fake news that poor people are lazy or unmotivated…no, it’s that we’re spending less on poor people than 50 years ago…almost everywhere…because corporations are axing their fair share.

Canada has a tax rate of 26.47 percent for corporations…and rather than lower it to 15 percent…the rest of the world should come closer to Canada’s rate. That way, everyone wins…if you have the audacity to actually say poor people win.

Another potential snafu, is an exemption of the proposed 15 percent tax rate for the shipping industry. The tax codes and policies for shipping it seems are more complex - read manipulated - than virtually any taxes anywhere on Earth.

But remember in 2012 when the UK government sought to simplify its complicated VAT rules and proposed the withdrawal of a hard-to-explain exemption for freshly baked takeaway food? It didn’t go well. It could be the same for shipping worldwide.

The answer is to simplify taxation…that’s always the answer to every kind of tax. The more special interests lobby and get their two cents in on new tax policies…the more the special interests ultimately end up making dollars not cents…or even sense.

Like global warming…or any other real problem that seems too big to wrestle with…we have a choice. Wrestle with fair global minimum corporate income tax now for a fair outcome…or keep on making things worse.

— Don Thompson, an American awaiting Canadian citizenship, lives in Vernon and in Florida. In a career that spans more than 40 years, Don has been a working journalist, a speechwriter and the CEO of an advertising and public relations firm. A passionate and compassionate man, he loves the written word as much as fine dinners with great wines.


We welcome your comments and opinions on our stories but play nice. We won't censor or delete comments unless they contain off-topic statements or links, unnecessary vulgarity, false facts, spam or obviously fake profiles. If you have any concerns about what you see in comments, email the editor.

News from © iNFOnews, 2021
iNFOnews

View Site in: Desktop | Mobile