Friday’s meeting of finance ministers in London is a chance to clean up global taxation – but will they take it?
When the chancellor, Rishi Sunak, welcomes the US treasury secretary, Janet Yellen, to the meeting of G7 finance ministers in London on Friday, those gathered around the table at Lancaster House will have the chance to strike the biggest blow against tax abuse in a century.
After decades of evidence that the international tax rules are unfit for purpose, the Biden administration has finally injected genuine ambition into efforts to prevent the super-profits of the world’s largest multinationals disappearing into tax havens. It’s a deal could deliver hundreds of billions of dollars in tax revenues to boost the pandemic response and recovery. But there is also a downside: the current OECD proposals would distribute those revenues in a manifestly unfair way. That would surely eradicate any remaining legitimacy the richest nations could claim for their privileged position of setting rules for the rest of the world.
Related: Global corporation tax reform: what are the key issues in G7 negotiations?
Alex Cobham is an economist and chief executive of the Tax Justice Network