The leading nation-states — the G-20 — yesterday issued a declaration of war against the largest multinationals on the matter of taxation. This has undoubtedly come about since the recent so-called ‘inversion’ events. These are when a large firm — usually America — buys another large firm in another country and moves its headquarters there in order to be taxed at a lower rate than previously. In one case the firm concerned gave in to heavy pressure from the US government and changed its mind. In two more recent cases the firms didn’t.
The G-20 now want to stop inversion and similar tax-dodging practices by agreeing to act in unison against multinationals. It will only be a mild declaration of war, however, because any group above five or six finds it difficult to come to decisions — or, if they do, the decisions don’t last long — because if the group members have disparate motives also these will prevail over the common objective. As examples, we can give the UN, WTO, OPEC, EC, NATO — all of them failing at their main purposes when it comes to the crunch.
The initiative — only slight at present — will always remain with the multinationals. Although governments will always be necessary for their basic tasks of security for their citizens, it is business that makes the world economy go round.