A few weeks ago, we published our report – A Global Tax Plan for a Global Pandemic. At the time, we advocated for a 21% global minimum corporate tax rate. Since then, the G7 have announced their agreement for a 15% global minimum corporate tax rate using an approach that as far as we know is broadly similar to the one outlined by the OECD in October 2020.
Using the data provided here, we have analysed the difference that a 15% compared to 21% global minimum tax rate would make to lower income countries. Our table below shows that, in total, lower income countries lose out on $8bn (£5.7bn) each year when you compare a 15% rate with a 21% rate. This comes at a time when the UK government is also decreasing the UK aid budget from 0.7% to 0.5% thereby depriving poorer countries of £4bn per year.
The government states that it wants to be a global leader. We are currently in the midst of a global pandemic. If it wanted to, our government could show that leadership by pushing for a global minimum corporate tax rate of at least 21% when it continues these discussions at the G20 in July.
To deprive poorer countries of almost £6bn in tax revenue at the same time as cutting £4bn in aid is simply scandalous. That’s £10bn that lower income countries could have been using to respond to the global pandemic still ravaging their countries.
*These figures are based on the OECD Oct 2020 proposal at a global minimum rate of 15% and 21%. We recognise that we do not yet have the detail of the G7 agreement to know whether or not the outcome would be substantially different under their proposal.
Dr Justin Thacker is the National Coordinator for Church Action for Tax Justice