By a logic of rights

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By THOMAS PIKETTY*

The Covid-19 crisis leads to a rethinking of the notion of international solidarity

The Covid-19 crisis, the most serious global health crisis in a century, forces a fundamental rethink of the notion of international solidarity. In addition to the right to produce vaccines and medical equipment, it is the whole question of the right of poor countries to develop and collect part of the tax revenue from the multinationals and billionaires of the planet that must be questioned. It is necessary to leave the neocolonial notion of international aid, paid according to the good will of the rich countries, under their control, to finally move to a logic of rights.

Let's start with vaccines. Some argue (recklessly) that it would be pointless to suspend property rights on patents, because poor countries would be unable to produce the precious doses. It's fake. India and South Africa have significant vaccine production capacity, which could be expanded, and medical supplies can be produced almost everywhere. It was not to pass the time that these two countries led a coalition of one hundred countries to demand from the WTO [World Trade Organization] the exceptional suspension of these property rights. By opposing this, the rich countries not only left the field open to China and Russia: they missed a great opportunity to change the times and show that their conception of multilateralism did not go just in one direction. Hopefully they back off pretty quickly.

France and Europe completely overtaken

But, beyond this right to produce, it is the entire international economic system that must be rethought in terms of the rights of poor countries to develop and not allow themselves to be plundered by the richest. In particular, the debate on international tax reform cannot be reduced to a discussion between rich countries with the aim of sharing the profits currently located in tax havens. That's the whole problem with the projects being discussed at the OECD [Organization for Economic Co-operation and Development]. Multinationals are expected to make a single statement of their earnings globally, which in itself is great. But when distributing this tax base among the countries, it is foreseen the use of a mixture of criteria (wage mass and sales carried out in the different territories) that, in practice, will result in the attribution to rich countries of more than 95% of the reallocated profits, leaving nothing but crumbs for the poor countries. The only way to avoid this announced disaster is to finally bring poor countries around the table and distribute profits according to population (at least in part)
This debate must also be framed within the broader perspective of a progressive tax on high incomes and wealth, not just a minimum tax on multinational profits. Specifically, the minimum rate of 21% proposed by the Biden government constitutes a significant advance, not least because the United States intends to apply it immediately, without waiting for the conclusion of an international agreement. In other words, subsidiaries of US multinationals established in Ireland (where the rate is 12%) will immediately pay an additional 9% tax to Washington tax authorities. France and Europe, which continue to defend a minimum rate of 12%, which would not change anything, seem to have been totally overtaken by events. But this minimum tax system for multinationals is still very insufficient if it is not part of a more ambitious perspective that aims to re-establish tax progressivity at the individual level. The OECD reports revenues of less than €100 billion, or less than 0,1% of world GDP (about €100 billion).
By comparison, a 2% global tax on wealth over €10 million would yield ten times as much: €1.000 billion a year, or 1% of global GDP, which could be allocated to each country in proportion to its population. Setting the threshold at €2 million would raise 2% of world GDP, or even 5% with a highly progressive rate for billionaires. Sticking to the least ambitious option would be more than enough to fully replace all current official international aid, which represents less than 0,2% of global GDP (and only 0,03% of emergency humanitarian aid), as recently recalled Pierre Micheletti, president of Action Against Hunger.

Combating illicit enrichment

Why should each country be entitled to a share of the revenues extracted from multinationals and billionaires on the planet? First, because every human being must have a minimum and equal right to health, education and development. Next, because the prosperity of rich countries would not exist without poor countries: Western enrichment has always been based on the international division of labor and the unrestrained exploitation of the planet's natural and human resources. Of course, rich countries could, if they wished, continue to fund their development agencies. But this would come in addition to this irrevocable right of poor countries to develop and build their States.
To prevent money from being misused, it would also be necessary to generalize the fight against illicit enrichment, whether in Africa, Lebanon or any other country. The uncontrolled capital circulation system and the lack of financial transparency imposed by the North since the 1980s have done much to undermine the fragile state-building process in the countries of the South, and it is time to put an end to it.
Last point: nothing prevents each rich country from starting to allocate to poor countries a fraction of the taxes levied on multinationals and billionaires. It is time to take up the new wind coming from the United States and steer it in the direction of a sovereignism supported by universalist objectives.

*Thomas Piketty is director of research at the École des Hautes Études en Sciences Sociales and professor at the Paris School of Economics. Author, among other books, of Capital in the XNUMXst century (Intrinsic).

Translation: Aluisio Schumacher protocols for Carta Maior Portal.

Originally published in the newspaper Le Monde

 

 

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