Digital companies celebrate. And the credit goes to the US Senate, which is slow to approve the long-awaited global taxation on web giants, decided by the G20. The approval of taxation would, in fact, be trapped in the cauldron of bureaucracy created in the USA. And not even Janet Yellen, Secretary of the US Treasury, can do anything, who at the end of the last G20 meeting in Brazil was invited by some G7 governments to highlight the importance of the measure coming into force. But an agreement between Democrats and Republicans to approve this measure in the Senate is almost impossible before the presidential elections next November. Before explaining why the US political machine is destroying the new taxation, it is necessary to take a step back and understand how this tax was born.
As explained by Tommaso Faccio in Il Fatto Daily, there has been talk of taxing the web giants since 2017. This was first done by Pier Carlo Padoan who at the G20 table was pushing for a political solution to the tax evasion of the various Googles , Facebook, Amazon, Netflix, Booking. Evasive practices by companies that “deprive, on a global scale, countries’ treasuries of revenue equivalent to 10% of total corporate income tax revenue”. A first agreement on global taxation arrived in October 2021: a minimum tax of 15% and a redistribution of global profits from the top 100-200 multinationals based on turnover. With this taxation, branches of Italian, American and English multinationals “will have to pay an effective rate of at least 15% even in tax havens” – writes the journalist. A measure that discourages the use of tax havens by multinationals and is celebrated as a victory. Partial, however, because the tax has meanwhile been weakened with a series of exemptions and loopholes.
“As it stands, it should increase the global tax revenue of multinationals by just 4.8%, around 200 billion dollars per year, instead of 9.5% – explains Faccio -. If they abolished the various exemptions, governments could raise an additional $130 billion.” Economy Minister Giancarlo Giorgetti recently updated us on the taxation situation: “I fear that the global taxation of multinationals will fail”, he declared, “this is what I realized when participating in the G20 and G7 meetings”. The fear arises from the main reason why taxation is paralyzed: approval of the international tax treaty by two-thirds of the US Senate is currently impossible. The final coup de grace? The estimate of the study by the American Joint Committee on Taxation estimated a loss for the State of at least 1 billion and 400 million dollars with the entry into force of the measure. However – concludes Faccio – while the measure is rejected, the Italian government watches helplessly: “For the Meloni government, which has made its motto ‘no to property taxation, yes to fair taxation for web giants’ and fighting with the Italian presidency of the G7 until the end of the year, is not a good vision.”
Source: IL Tempo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
