J.Stiglitz, T.Piketty, J.Ghosh & J.Ocampo

I.S.E.O. Institute is partnering with Università degli Studi di Brescia for the project “Nobels, Economists and Scientists for Covid-19”: a gathering of articles, essays and short videos by Nobel Laureates in Economics, economists and scientists from all over the world willing to give their contribute to comprehend what effects the Covid-19 spread will have on our lives and economies. We will be regularly publishing columns on our website (under the section Conferences/Covid) and on the webpage of University of Brescia. As you all know, our area is at the heart of the Coronavirus spreading: and with all our events suspended, we felt like we had to carry on our activity anyway. This is exactly the mission our beloved founder Franco Modigliani wanted the I.S.E.O. Institute to have: help understanding global economy. If we can’t do it by promoting conferences and Summer Schools because of the virus, we can do it by sharing distinguished and respected economists’ views on the web, reaching a huge and worldwide audience.

Who will pay for post COVID-19 recovery? The Global Pandemic, Sustainable Economic Recovery and International Taxation

Leading economists Joseph Stiglitz, Thomas Piketty, Jayati Ghosh and José Antonio Ocampo, all ICRICT (Independent Commission for the Reform of International Corporate Taxation) members, have launched a new report on how governments can efficiently and fairly raise tax revenues to help fund the response to and recovery from the coronavirus.

The global pandemic has led to major structural increases in public expenditure to support health, incomes and employment. The question of who will ultimately foot the bill will need to be answered, but the economic burden must not fall disproportionately on disadvantaged groups and countries.

Reductions in corporation tax ‘to stimulate reconstruction investment’ will be neither economically effective nor socially desirable. Rather, corporate tax systems should be strengthened by accelerating truly inclusive international cooperation on base erosion and minimum rates, by making these taxes more progressive to stimulate small firms, and by ensuring effective taxation of the offshore wealth of shareholders.

The report lists five 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? end the era of tax havens and the ‘race to the bottom’ on corporate taxation. The measures ICRICT is asking governments to take are:

1.  apply a higher corporate tax rate to large corporations in oligopolised sectors with excess rates of return;
2. set a minimum effective corporate tax rate of 25% worldwide to stop base erosion and profit shifting;
3. introduce progressive digital services taxes on the economic rents captured by multinational firms in this sector;
4. require publication of country by country reporting for all corporations benefitting from state support;
5. publish data on offshore wealth to enable all jurisdictions to adopt effective progressive wealth taxes on their residents and to be able to better monitor effective income tax rates on highest income taxpayers.

The full report, in English, can be downloaded at the bottom of this page, as well as the executive summary with key figures and examples. You can also watch the online press conference organized by Icrict/Oxfam and joined by Joseph E. Stiglitz, Thomas Piketty, Jayati Ghosh and José Antonio Ocampo.