While the Biden administration is hailing the commitment from the Group of Seven wealthy nations to a global minimum tax, actual implementation is still quite a way off on a path fraught with obstacles.
On Saturday, after meeting with the G-7, Treasury Secretary Janet Yellen announced that the finance chiefs had agreed to move forward with a 15% global minimum tax, a policy that President Joe Biden has sought. Yellen called it an “unprecedented commitment,” although many details have not been agreed to and dozens of more countries need to weigh in.
David Sacco, practitioner in residence at the University of New Haven finance department, said that the Saturday news was somewhat of a big deal in the sense that the G-7 countries were all able to agree on the 15% figure, although he pointed out that there are still a lot of details to be hammered out as to how a global minimum tax would be implemented and that it will likely be at least a couple of years before the plan would be effective — that is, if it even ends up being implemented.
The next step in the process is a G-20 meeting in Italy. The G-20 includes the seven wealthy and developed countries that agreed to the 15% concept but also others that might take a little more convincing. Some of the additional countries include China, India, Brazil, and South Africa.
“We’ll have to convince the other great powers, especially the Asian ones. I am thinking in particular of China,” said France’s finance minister, Bruno Le Maire. “Let’s face it, it’s going to be a tough fight. I am optimistic that we will win it because the G-7 is giving us extremely powerful political momentum.”
Furthermore, a majority of the approximately 140 countries involved in negotiations as part of the Organisation for Economic Co-operation and Development will have to sign off on the plan.