U.S. Treasury Secretary Urges Europe To Support Global Tax Proposal

U.S. Treasury Secretary Janet Yellen has urged European Union (EU) countries to sign on to a global deal that will revamp corporate taxation, keep fiscal support through 2022, and continue 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 delivered to EU finance ministers on Monday (July 12).

Irish Finance Minister Paschal Donohoe, who chairs the EU finance ministers meeting, maintained his reservation about a global minimum corporate tax rate in a meeting with Yellen, though several other European countries support the action.

The European Commission said that it will delay its planned levy on digital services to focus on the global tax deal, final details of which are expected to be unveiled this October.

The EU has been under pressure from the U.S. government, which wants existing national digital service taxes to be repealed as part of the global overhaul of cross-border corporate taxation.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 Europe to the COVID-19 pandemic had been “decisive and unprecedented,” with a rapid response also from the European Central Bank (ECB).

“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 in her comments to the EU finance ministers.

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