New G7 tax agreement not good enough: tax lobby group

A Canadian tax lobby group is criticizing the global tax deal announced this weekend by G7 Finance Ministers, fearing it will let the biggest corporations in the world off the hook. On Tuesday, Canadians for Tax Fairness, a non-profit and non-partisan organization, issued a press release giving its analysis of the agreement outlined by the G7 that could impose “at least" a 15 per cent tax on the foreign earnings of multinational companies. The new proposal sets a global minimum tax rate of at least 15 per cent, and would give countries taxing rights on companies based on where they do business, rather that where they are officially located. Under the G7 agreement, countries would have taxing rights on at least 20 per cent of profit exceeding a 10 per cent profit margin for large multinational enterprises. However, according to Canadians for Tax Fairness, Amazon.com often records profit rates below the 10 per cent threshold while also paying very low rates of tax, raising concern that Canada and other countries might not be able to collect corporate taxes under the proposed G7 agreement. “If tax-dodging behemoths like Amazon can still get off tax-free, the deal is a fair tax flop,” Canadians for Tax Fairness policy researcher D.T. Cochrane said in the release. Over the past several years, the Organisation for Economic Co-operation and Development (OECD) has been working on international tax rules to apply across 140 countries, and estimates in its report that a unified tax would increase global corporate income tax revenues by about 5$0-80 billion (USD) per year. Corporations are currently able to circumvent high taxation through profit shifting, the use of tax havens, and tax creditors, creating a so-called “race to the bottom.” “We’re glad that the G7 Finance Ministers are determined to achieve some reforms, but they and the OECD will have to be much more ambitious to really make a significant difference,” executive director of Canadians for Tax Fairness Toby Sanger said in the release. Sanger said in a phone interview with the Wire Report that the agreement is a "once in a generation chance to make change” and that Canada should push for at least a 21 per cent tax rate, but would ideally like to see it shift up to 25 per cent “given that our statutory tax rate on domestic companies is over 25 per cent.” His organization estimated that Canada could gain between $11 to 20 billion annually with a global minimum corporate tax rate of 21 to 25 per cent. In April, chair of the Council of Canadian Innovators (CCI) Jim Balsillie testified to the House of Commons Industry committee, as it held a study on competitiveness in Canada, where he noted that old systems focusing on tax breaks were not conducive to a thriving or modernized “intangibles economy.” On the subject of a global tax, James McLeod, content and communications manager with CCI said in an email that the new tax framework does help address “jurisdiction shopping” as a form of tax avoidance — a practice which global tech giants have “effectively used” to create a race-to-the-bottom between countries. However, he added, the new tax framework fails to address "many of the most pressing issues that are unique to intangible economy,” such market domination, worsening work conditions, wage arbitrage and data practices which “erode personal autonomy and privacy.” “A multilateral approach to many of these issues would be productive, and the G7 minimum tax agreement offers an encouraging signal that such a co-operative approach is possible," McLeod wrote. "However, as we enter into these discussions, it is vitally important that Canada preserves policy latitude to set its own rules for governing the contemporary economy in a manner that supports our economic, security and sovereignty priorities." — Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

New G7 tax agreement not good enough: tax lobby group

News | June 8, 2021

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

New G7 tax agreement not good enough: tax lobby group

News | June 8, 2021

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Quebec judge approves Apple class action settlement

Privacy commissioner hasn’t approved new gov’t contact tracing app

CRTC commissioning report about market impact of online BDUs

Freedom answers to ‘unlimited’, offers $0 phones on select plans

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us