The IMF proposal on a minimum tax rate will be game-changing if it can win sufficient support
Switching to green economy a holistic shift across entire society. Picture: DOROTHY KGOSI
Ideally, there must be green post-Covid growth, but how can we use the available measures in the armoury against climate change to accelerate this? The next big climate gathering will be the Cop26 meeting in Glasgow in November, where there will be a lot of conversations about national commitments to curb emissions.
Global co-operation on this scale was given a big boost at the recent Group of Seven summit, when world leaders signed up to an agreement for a minimum global tax rate of 15%, and the response since then has been encouragingly positive. It would help to do away with tax havens and ensure that everyone — especially the elusive multinationals — pays their taxes.
Despite the trade distortion impact, it seems this will be allowed by the World Trade Organization as it can be presented as an environmental tax. Despite this, it will hit developing countries more than others, and bear in mind that SA has a very high carbon footprint and would fall victim to this measure.
Carbon prices appear both in state-imposed carbon taxes and in the trading system for carbon offsets, where the offset price is market-driven. At present countries all have their own different carbon prices, and there is no harmonisation. This makes the international environment more and more complex for companies to navigate and make investment decisions.
All these complexities and challenges need serious consideration by the larger economies, but should not prevent them from moving towards an agreement on a minimum carbon price. The IMF plan has the big advantage that it needs initially to be adopted by only a small group of big emitting countries — one can count them on the fingers of one hand — and, surely and slowly, you can then crowd in others in over time.
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