Yellen urges EU to back global tax deal, keep fiscal support

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U.S. Treasury Secretary Janet Yellen urged European Union countries on Monday to sign on to a global deal to revamp corporate taxation, keep fiscal support through 2022 and consider more spending in the face of COVID-19 uncertainty.

“We need sustainable sources of revenue that do not rely on further taxing workers’ wages and exacerbating the economic disparities that we are all committed to reducing,” Yellen said in remarks prepared for delivery to Eurogroup finance ministers.

“We need to put an end to corporations shifting capital income to low tax jurisdictions, and to accounting gimmicks that allow them to avoid paying their fair share.”

The race to the bottom must end, she said.

Irish finance minister Paschal Donohoe, who chairs the Eurogroup of euro zone finance ministers, maintained his reservation about a global minimum corporate tax rate in a meeting with Yellen, his spokesperson said.

The European Commission said on Monday that it will delay its own planned levy on digital services to focus on the global tax deal, final details of which have to be agreed in October.

The EU has been under pressure from the U.S. administration, which wants existing national digital service taxes to be repealed as part of the global overhaul of cross-border corporate taxation.

Yellen said that the fiscal response of the EU and its members to the COVID-19 pandemic had been “decisive and unprecedented”, with a rapid response also from the European Central Bank.

“I think we all agree that uncertainty remains high. In this context, it is important that the fiscal stance remain supportive through 2022,” she said.

She added that EU member states should also “seriously consider” additional fiscal measures to ensure a robust domestic and global recovery. 

Janet Yellen, Secretary of the Treasury of the United States. EC Audiovisual Service