Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
This weekend’s meeting of finance ministers from the world’s richest countries struck an historic agreement on multinational taxation.
But of immediate concern for the G20 and the key institutions attending the mostly online gathering from Venice was the growing spread of the highly infectious Delta variant of COVID-19.
International Monetary Fund managing director Kristalina Georgieva said while the global rebound from recession continued, a two-track recovery was emerging with the poorest countries lacking access to vaccines as infection rates surged.
“With a dangerous wave of a highly transmissible variant now making its way across the globe, the pandemic remains the fundamental risk facing the world,” she said in a post-meeting statement.
Australia’s former finance minister Mathias Cormann, who now heads the Organisation for Economic Cooperation and Development, agreed the world economic recovery faced serious downside risks.
“Economic policy priority number one, two and three remains to vaccinate as many people all around the world as possible, as quickly as possible,” he told The Australian.
“The concern remains that new variants of the virus will create more lethal waves of infections, with a new wave of economic hardship.”
The IMF wants to see 40 per cent of the population in every country vaccinated by the end of 2021 and 60 per cent by the middle of 2022.
So far, Australia has only managed to fully vaccinate just over 10 per cent of its citizens above 16 years of age.
At this stage, both the IMF and the OECD are sticking with their global growth projections for 2021 of six per cent and 5.8 per cent respectively.
Those at the meeting agreed to establish a global minimum corporate tax rate of 15 per cent to deter multinationals from shopping around to base their entities in low-taxing countries.
The decision ends eight years of internal wrangling and national leaders will give their final blessing at the G20 summit at Rome in October.
Treasurer Josh Frydenberg said the historic international tax agreement would ensure multinationals paid their fair share of tax in Australia, while encouraging international trade and investment.