The global pandemic has led to major structural increases in public expenditures to support health, incomes and employment. The question of who will ultimately foot the bill will need to be answered. A report launched on 15 June by the Independent Commission for the Reform of International Corporate Taxation alerts that the economic burden must not fall disproportionately on disadvantaged groups and countries.
The commission is comprised of economic experts and leaders from around the world who believe that there is both an urgent need to bring about significant tax reform to address pressing challenges of inequality, climate change, and now the COVID-19 crisis.
Entitled "Who Will Pay The Recovery,” the report on tax justice and COVID-19 underlines that tax systems should be strengthened by accelerating truly inclusive international cooperation, by making these taxes more progressive to stimulate small firms, and by ensuring effective taxation of the super wealthy and especially their offshore wealth.
For Rev. Suzanne Matale, from Zambia, the pandemic is hurting already struggling countries in Africa. “Our countries are in dire and urgent need of resources to tackle the health emergency and its socio-economic repercussions on the vulnerable,” said Matale, a commissioner of the Independent Commission for the Reform of International Corporate Taxation. “This COVID-19 season must be the turning point for a new economic order driven by principles of justice, impartiality and fairness.”
The report lists steps governments can take to tackle tax avoidance―which has left governments with fewer resources to meet critical priorities in the wake of the pandemic― and to end the era of tax havens and the ‘race to the bottom’ on corporate taxation.
The commission is asking governments to set a minimum effective corporate tax rate of 25% worldwide to stop tax avoidance by multinational corporations and the erosion of tax bases. .
Dr Manuel (Butch) Montes, a member of the Ecumenical Panel on a New International and Financial Architecture and senior advisor at the Society for International Development, stressed that the participation of the World Council of Churches (WCC) in the Independent Commission for the Reform of International Corporate Taxation helps to resonate the ecumenical message “Calling for an Economy of Life in a Time of Pandemic,” launched last May by the WCC, World Communion of Reformed Churches, Lutheran World Federation and Council for World Mission.
Montes reminded that the ecumenical call seeks the “initiation of a progressive wealth tax, financial transaction tax and carbon tax at national and global levels; the reintroduction of capital gains and inheritance taxes; and measures to curb tax evasion and avoidance...to resource the critical response to the pandemic.”