G20: Policy of the Least Common Denominator
At the G20 summit in St. Petersburg the incumbent German government has its last major international performance.
- By Axel Troost, spokesperson for fiscal policy of the faction of DIE LINKE in the Bundestag and vice chair of DIE LINKE
From a fiscal point of view the failure is already preprogrammed. Because as regards the measures against aggressive tax avoidance by international corporations as well as regulating the shadow banking system the preliminary decisions are already arrived at.
Hesitant action plan against tax avoidance
Totally legal, big corporations make their profits appear small to reduce the tax burden. Between the taxed profits of German corporations and the national account yawns a profit gap of 60 to 90 billion euro which cannot be explained without tax dodges. Especially transnational corporations keep a whole tax avoidance industry busy to this effect.
Corporation taxing was supposed to become a big issue at the G20 summit. For this the association of industrial states OECD presented an action plan beforehand. It was consensually agreed on and was therefore correspondingly meagre. It admittedly calls the problems by name and lists sound counter measures. But it mainly contains audit engagements and declarations of intent.
Nothing else is to be expected by the summit declaration. The German government should have renegotiated in advance, thereby using its full political weight. But for the ministry of economics the already lax action plan is in many parts too far-reaching. It can be expected to be further tattered within the next two years.
No unique impulses regarding shadow banks
Also, regarding the regulation of shadow banks the government does not contribute own ideas. Already in March the governing parties urged for „ambitious proposals on the global monitoring and regulation of the shadow banking system and its activities“ prior to the G20 summit. But this will come to nothing.
Once again, initially an expert committee was installed, this time the fiscal stability council FSB. And once again consensual agreements provide for a policy of the least common denominator. It presented some detailed recommendations for certain – for Germany insignificant – money market funds. Apart from that G20 shall for now only assure that the process keeps moving. The federal government stands now disgraced also because it completely renounced own advances. Ambitious policy looks different.
Policy of the least common denominator
The G20 summit will, as so many before, remain widely without consequences. But this is nothing new. The federal government can mainly be charged for not having approached the problems on another level. It could have long cut the connections of German corporations with the flourishing, mainly abroad residing shadow banking system by deduction at source or other sanctions. But it relies on remedy by technocrats.
Corporate taxes have been massively reduced during the last years. We advocate European-wide harmonised company taxation and higher tax rates to stop the redistribution in favour of capital. On parliamentary level we always offensively fought tax avoidance practices. But the fight against the tax avoidance industry is a very unequal struggle. A real change in trend can only be brought about when tax competiton is generally labelled harmful und is then fought consequently by ministries and authorities. This will neither Angela Merkel nor Peer Steinbrück do without a left faction in the Bundestag.