April 24, 2021 9:58 am
The covid-19 pandemic, the most serious global health crisis in a century, forces us to rethink the idea of international solidarity. In addition to the right to produce vaccines and medical supplies, we need to question the right of poor countries to develop and to receive a part of the tax revenue generated by multinationals and billionaires of the planet. We need to get out of the neocolonial idea of international aid entrusted to the goodwill of rich countries and move to a logic based on collective rights. Let’s start with vaccines.
Some argue (wrongly) that it would do no good to cancel drug patents, because poor countries would not be able to produce vaccine doses on their own. It’s false. India and South Africa have significant production capacities, which could be strengthened, and sanitary materials can be manufactured almost anywhere. It is no coincidence that India and South Africa have taken the reins of a coalition of a hundred countries to ask the World Trade Organization (WTO) to cancel patents. By opposing this initiative, the rich countries have left the field free to China and Russia and have also lost the opportunity to trigger an epochal change and to show that their conception of multilateralism is not only going in one direction. Let’s hope they back down.
The only way to avoid disaster is to invite poor countries to the negotiating table and redistribute profits based on population
In reality, the whole world economic system must be rethought. In particular, the debate on tax reform cannot only concern rich countries, which want to share the profits transferred to tax havens. The problem of the projects discussed within the Organization for Economic Cooperation and Development (OECD) is precisely this; the OECD would like multinationals to make a single declaration of their profits globally, which in itself is excellent. But to divide this tax base among countries, it is planned to use a mixture of criteria that will in practice lead to more than 95 percent of redistributed profits being attributed to rich countries, leaving only the crumbs to poor ones. The only way to avoid this disaster is to invite poor countries to the negotiating table and redistribute profits (at least in part) by population.
We must also place this debate in the broader perspective of a progressive tax on higher incomes and wealth, and not just a minimal tax on the profits of multinationals. The minimum tax of 21 percent proposed by the Biden administration is a major step forward, especially since in the United States it is expected to apply immediately. In other words, the branches of US multinationals based in Ireland (where the rate is 12 percent) will pay an additional 9 percent tax to the Washington taxman. France and Europe, which continue to defend the idea of a minimum tax of 12 percent, appear completely overwhelmed by the events.
However, this system of minimum taxation on multinationals remains insufficient if it is not inserted in a more ambitious perspective to restore the progressiveness of taxation at the individual level. The OECD makes proposals that would yield less than one hundred billion euros, or less than 0.1 percent of world GDP (about one hundred thousand billion euros). To make a comparison, a world tax of 2 per cent on assets exceeding ten million euros would generate ten times as much: one trillion euros per year, or 1 per cent of world GDP, which could be redistributed to every country based on its population. Even the least ambitious option would be enough to replace all current international public aid, which represents less than 0.2 per cent of world GDP.
But why would every country be entitled to a portion of the money taken by the multinationals and billionaires of the planet? First of all, because every human being should have an equal right to health, education and development. And then because the prosperity of rich countries would not exist without poor countries: the enrichment of the West is based on the international division of labor and the unbridled exploitation of the planet’s natural and human resources.
To prevent money from being misused, the hunt for illegally accumulated fortunes, whether from Africa, Lebanon or any other country, should be extended. The system of uncontrolled circulation of capital and financial opacity imposed by the north of the world since the 1980s has helped to undermine the fragile state-building process in the countries of the south, and it is time for it to end.
Last point: nothing prevents every rich country from reserving a part of the taxes levied on multinationals for the poor ones. It is time to take advantage of the new wind coming from the United States and to direct it towards a universalist sovereignty.
(Translation by Federico Ferrone)
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