The OECD’s latest proposals would change little in a rigged system. Britain should back a new global scheme
The international tax system was recently shaken by two new tremors. Ángel Gurría, the secretary-general of the OECD, the club of rich nations that oversees these global rules, told Britain to “hold fire” on its plan to tax big tech firms such as Google, Facebook and Apple at 2% of UK revenues. The US responded by threatening to hike tariffs on UK car exports, but Britain’s chancellor, Sajid Javid, insists the tax will still go ahead from April. France’s president, Emmanuel Macron, also agreed to delay (but not discard) a similar tax in exchange for the US’s agreement not to place tariffs on French exports. The vast tectonic plates of international taxation are finally beginning to shift.
Without a coordinated, global agreement on new tax rules, Gurría argues, the result of all these measures will be a “cacophony and a mess”. A new trade war could ensue. But there’s another side to this story – one just as important, but less well understood.