On April 5, U.S. Secretary of the Treasury Janet Yellen issued a call for a global corporate tax rate, a major shift from the neoliberal consensus that has primarily governed the global economy since the 1980s. This announcement was soon followed by a more detailed document distributed to the Organization for Economic Cooperation and Development (OECD) outlining U.S. ambitions for global tax reforms that, if implemented, could have major implications on several fronts, including communications. France and Germany expressed openness to work with the U.S. on these proposals.
In essence, the U.S. is calling for two major changes. The first one would be for most countries, some of which have vastly different corporate tax rates, such as the U.S. (21 per cent), the U.K. (19 per cent), France (33 per cent) or Hungary (9 per cent), to agree on a single rate to create a more level playing field between them. This would result in corporations having less of an incentive to shift their operations between countries, and that the "30-year race to the bottom" that has seen several countries competing to attract foreign investment by dropping corporate taxes would come to an end.
The second would be that global corporations would be forced to pay taxes in the jurisdictions where they generate their income, thus preventing the shifting of profits from countries with higher taxes to countries with lower taxes and ultimately reducing tax avoidance. Some US$245 billion are lost to corporate tax evasion each year.
The medium- and long-term effect of these changes would be that states would have a more stable and perhaps sizable tax base. This would, in theory, allow for greater state spending at a time when the COVID-19 pandemic and the threat of climate change necessitate greater state intervention in the economy, as exemplified by the United States' recent announcement to spend $2 trillion on infrastructure.
Calls for tax reforms are growing around the world, including in Canada, where the rich grew even richer one year after the pandemic, according to a report by Alex Hemingway, an economist and public finance policy analyst at the Canadian Centre for Policy Alternatives. While 5.5 million Canadians lost their jobs and small business closed during the pandemic, Canada's 47 billionaires increased their wealth by $78 billon, said Hemingway.
This stark contrast has renewed calls for Canada to address growing inequality. "I think we're starting to get to a breaking point," he told the Toronto Star. "People feel that something needs to be done." Hemingway noted that "there is enormous public support across party lines for a wealth tax" -- which was unfortunately not introduced in the Liberal Party's 2021 budget -- along with other tax and social policies to address inequality in Canada.
Should the U.S. proposals become reality, the resulting increased tax revenues in rich countries and the need for massive economic stimuli in order to kick start countries' economies represent a major opportunity to address some of the issues communication rights advocates have been speaking out about for years. Some examples include:
- Reining in the power of tech companies. The proposed changes would have a major impact on the tech corporations that have come to dominate the global communications landscape, such as Facebook, which is estimated to only pay a corporate tax rate of 12.2 per cent thanks to its ability to shift their operations and profits between countries. Canada is already moving in this direction by introducing a digital services tax expected to generate US$3.7 billion per year starting in 2022.
This presents an opportunity to demand greater accountability and transparency from tech companies, including the possibility of applying measures that would tackle the monopolistic nature of some of these companies' operations, as well as to continue to advocate for policy changes that would force tech companies to share ad revenue with public interest media, following the example being set by Australia.
- Calling for greater investment to tackle access and affordability to digital communication. Forty per cent of the world's population has no access to the internet, with countries such as India (50 per cent), Ethiopia (81 per cent), and Brazil (29 per cent) having significant portions of their population classified as "unconnected." In terms of mobile telephony, while access has increased significantly -- there were an estimated five billion cellphone users as of 2019 -- only 45 per cent of mobile phone users in developing countries have access to a smartphone. Affordability is one of the major barriers keeping many people, especially those living with low incomes in developing countries, from having reliable and meaningful access. Both access and affordability were key factors in whether or not people's livelihoods and health were protected during the pandemic, as people with reliable access to digital resources were far more likely to continue to work during lockdowns and were less likely to become infected.
As countries embark on their post-pandemic recovery efforts aided by the prospect of greater public spending, communication advocates should call for infrastructure investments that enable everyone to truly benefit from digital resources, including people living in remote, rural, and/or Indigenous communities. While the responsibility to increase access and affordability remains with each country, wealthy countries can play a role in promoting progress in the right direction through increased international development funding.
- Advocating for public interest media as a critical infrastructure. In recent years, the rise of "fake news," "information bubbles" and the "post-truth" era stemming from the growing dominance of social media platforms have put a spotlight on the critical role that public interest media play in maintaining social cohesion and creating the conditions for democratic and informed debate.
In this context, there might be opportunities to advocate for greater spending on media and journalism that serves the public interest, including for independent state broadcasting services, as essential infrastructure that will not only safeguard democracy but also contribute to social cohesion in a post-pandemic era. On an international level, this can take the form of greater international development funding dedicated to media development and support towards initiatives such as the International Fund for Public Interest Media.
As Joaquin Estefania writes in El Pais, these proposed changes are indicative of a "shedding of skin" in global capitalism through which the economic system is attempting to meet the many challenges it faces, including climate change, growing inequality, and people's lack of trust in the system following more than a decade of austerity measures.
This may well result in a major shift in economic thinking towards a model in which high unemployment, massive wealth concentration, or inequitable access to services -- as opposed to spending deficits and government debt -- are seen as the real crises that need to be tackled. Should this shift take place, communication rights activists should work to seize any opportunities that may come about to promote people's right to communicate.
Lorenzo Vargas is a communication for development specialist and researcher on citizens' media. Lorenzo coordinates WACC Global's communication for social change program, which supports community media and citizen journalism initiatives in Asia, Latin America, the Caribbean, the Pacific and Africa. WACC Global is an international NGO that promotes communication as a basic human right, essential to people's dignity and community. It is a member of the ACT Alliance.
Image credit: Chuck Olsen/Flickr
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