rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » G20 backs tax plan, seeks to chart recovery

G20 backs tax plan, seeks to chart recovery

July 19, 2013 15:57 IST

G20 backs tax plan, seeks to chart recovery

     Next

Next
Gernot Heller and Jan Strupczewski in Moscow


T
he Group of 20 nations backed a tax plan on Friday that takes aim at the loopholes used by multinational firms and responds to anger among voters hit with higher tax bills to cover soaring national debts.

Finance ministers and central bankers gathering in Moscow were otherwise focused on sharting a course towards global economic recovers, and seeking to calm financial markets worried about the impact of stimulus programes

The G20, a forum that took the lead in the 2008-09 financial crisis, now faces a multi-speed global economy in which only the United States appears to be nearing a self-sustaining recovery.

China, for years the engine of global growth, is suffering a slowdown amid doubts over the stability of its financial system, Japan has only recently embarked on a radical fiscal and monetary experiment, and Europe's economy is more stop than go.

Collective efforts to balance the prospect of a withdrawal of US monetary stimulus against expansionary policies elsewhere evoke visions of passengers rushing from port to starboard to stabilise a listing ship.

Chairman Ben Bernanke's guidance in May that the Fed may start to wind down its $85 billion in monthly bond purchases - intended to ease the flow of credit to the economy - triggered a steep sell-off in stocks and bonds, and a flight to the dollar.

Investors were calmed by dovish testimony to Congress this week by Bernanke, who is not coming to Moscow. Yet emerging markets - especially those that depend on commodities or that have external deficits - have underperformed.

There will be some focus on central bank's giving so-called forward guidance, essentially managing market expectations. "(It is) crucial for preventing serious volatility on financial markets", Russian Finance Minister Anton Siluanov told reporters.

Negotiators working on a joint communique reconvene after a drafting session on Thursday night that sources said was less fraught than at the February G20 meeting in Moscow. Ministers review the text over dinner.

Also on Friday, the BRICS emerging markets caucus - Brazil, Russia, India, China and South Africa - was due to meet. They were unlikely to progress on joint steps, such a shared pool of forex reserves, to guard against capital flight.

Click on NEXT for more...


Image: A tower of the Kremlin is seen behind a sign hanging on the Manezh Exhibition Center, venue for this week's meeting of G20 Finance Ministers, in Moscow.
Photographs: Sergei Karpukhin/Reuters

     Next

G20 backs tax plan, seeks to chart recovery

Prev     Next
Prev

Next

Jobs commitment

The United States is beating its fiscal targets thanks to improving growth and Washington has urged the G20 to prioritise growth over fiscal consolidation sought by Europe's largest economy, Germany.

G20 labour ministers, who met on Thursday, hold a joint session on Friday with finance ministers, putting the jobs crisis in Europe - where youth unemployment is nearly 60 percent in debt-strapped Greece and Spain - at the centre of the debate.

"Getting people back to work must be top of the agenda," US Treasury Secretary Jack Lew wrote in an article for the Financial Times. "In many parts of the world, such as Europe, growth is too weak to drive job creation."

Lew also urged China to speed reforms towards demand-led growth. Other G20 nations, led by Japan, are seeking greater clarity from China on how strains in its 'shadow' banking system will play out.

The European Union's employment commissioner, Laszlo Andor, shared Lew's prescription for recovery, telling Reuters that investment in jobs was vital for maintaining social peace and emerging from years of austerity.

"If in the name of competitiveness and internal devaluation you just compress wages constantly, you also kill demand and you can kill the recovery," Andor said.

The G20 released a tax action plan drawn up by the Organisation for Economic Co-operation and Development (OECD) that said the existing system didn't work, especially when it came to taxing companies that trade online.

The tax plan is one of the major 'deliverables' that will go go before the summit of G20 leaders being hosted by President Vladimir Putin in St Petersburg in early September.

Click on NEXT for more...


Image: Finance Minister Palaniappan Chidambaram at the G20 finance ministers meeting.
Photographs: Yuri Gripas/Reuters

Prev     Next

G20 backs tax plan, seeks to chart recovery

Prev     More
Prev

More

Protest in Moscow

Russia, the first big emerging nation to host the annual presidency of the G20, finds itself in an awkward political spot following the flight of former US spy agency contractor Edward Snowden to Moscow.

G20 delegates arriving at Sheremetyevo airport may not have bumped into Snowden, who has requested asylum in Russia, but they run into a protest in Moscow over the jailing on Thursday of a prominent Russian opposition politician.

Alexei Navalny, who organised protests against Putin's election for a third Kremlin term last year, was sentenced to five years in prison for theft in a case that drew international condemnation as politically motivated.

Navalny was released on bail on Friday pending an appeal.

Officials checking in to the five-star Ritz Carlton hotel on Moscow's central Tverskaya Street paid little attention to thousands of Navalny supporters protesting outside, in keeping with a G20 tradition of keeping politics and policy separate.

"The rally and the traffic jams are causing meetings to be postponed," said one European diplomat. "But we fully understand the democratic right to protest."


Image: A general view of the Manezh Exhibition Center.
Photographs: Sergei Karpukhin/Reuters

Prev     More
Source:
© Copyright 2013 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.