July 17, 2021 - Douglas Myser

Digital tax levy meets resistance. As the economic fallout from Covid is felt across the world, leaders of multiple countries are looking for ways to fund economic bailout, infrastructure, and financial aid programs, to citizens all over the globe. Trying to find the revenue to do this has been challenging, even though most leaders agree that the need exist, not all agree on how to fund the needs, or how big the proposals should be. Trying to find common ground sometimes works in these situations, yet sometimes one side or the other digs their heels in and then the legislative process gets a bit messy. Some European officials are considering a further postponement of any digital levy proposal until the fall, according to people familiar with the plans. Asked if the planned levy would violate global deals, Janet Yellen avoided a direct answer but signaled the U.S> is not satisfied with the European's justification for it. Digital tax levy meets resistance.

"It's really up to the European Commission and the members of the European Union to decide hos to proceed," she said. "But those countries have agreed to avoid putting in place in the future, and to dismantle, taxes that are discriminatory against U.S. firms." The global deal is designed to stop major corporations from moving to low tax jurisdictions and to establish a fairer system for distributing the taxation rights on multinationals based on where they operate instead of where they are headquartered. The latter component also includes an agreement to end so called services taxes that several European countries have implemented to target the revenues of large tech companies like Facebook and Alphabet's Google. While European Union officials haven't finalized the plan for the bloc wide levy, they have said its name is misleading and it wouldn't qualify as a DST. Janet Yellen is set to meet with the European Union Finance Minister and have a collective meeting with the European Central Bank President Christine Lagarde.