Janet Yellen, secretary of the US Treasury, went to Brussels this Monday to ask the European Union for more efforts. It wants more fiscal stimulus during the next year, more spending to face the uncertainty created by the pandemic and a postponement of the European Commission’s proposal for digital taxes, according to the Reuters news agency. The Commission has already accepted the last request.
“We need sustainable sources of revenue that do not rely on raising more taxes on workers’ wages, nor on exacerbating the economic disparities that we are all committed to reducing,” said Yellen, who holds a position equivalent to that of finance minister, according to the speech he had prepared for the Eurogroup meeting, which Reuters had access to.
According to the agency, the North American official encouraged the countries of the European Union to maintain fiscal stimuli on the ground for the next year and to spend more to face the uncertainty generated by the pandemic.
A new wave of covid-19, driven by new strains of the virus, has raised further questions about the strength of the recovery in the second half of the year. For the time being, the perspective is that the European Union’s fiscal rules that oblige countries to reduce their indebtedness are suspended next year, but may return as early as 2023, which forces countries to take care of their budgetary position well in advance. .
“I think we all agree that uncertainty remains high. In this context, it is important that fiscal policy remains accommodative throughout 2022,” said Yellen, quoted by Reuters. The agency notes that the US official even argued that member states should “seriously consider” additional fiscal measures to ensure a robust domestic and international recovery.
Digital tax is to wait
But Janet Yellen also asked the Commission to postpone its proposal for digital taxes, to make room for the realization of the agreement reached at the G20 to introduce a minimum tax rate on multinationals.
“We need to end the practice of companies shifting their capital income to low-tax jurisdictions, and the accounting tricks that allow them to avoid paying the fair share [de impostos]”, will have underlined yet.
Yellen stressed that the countries are committed to dismantle the mechanisms for taxing digital companies, and to avoid the creation of these systems in the future, considering that they discriminate against US companies.
This is one of the ways in which the EU has been working to increase its own revenues to finance the Recovery Fund, created to reform the economy after covid-19. But Yellen’s arguments were convincing. The Commission has already announced the suspension of work on this proposal until the autumn.
Source: Jornal de Negócios by www.jornaldenegocios.pt.
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