Oxfam on Tuesday blasted the European Union for delaying a discussion on a global minimum corporate tax rate due to a battle with Hungarian Prime Minister Viktor Orbán’s government over military aid for Ukraine and E.U. funding for Hungary.
“E.U. national interests have prevailed despite the cost-of-living crisis.”
The developments came after Orbán’s government in June blocked an E.U. directive supporting a 15% international tax rate negotiated by members of the Organization for Economic Cooperation and Development (OECD)—a move that garnered global condemnation even as tax justice experts and economists argued the rate is far too low. Hungary has the bloc’s lowest corporate tax rate, at 9%.
“Once again, E.U. countries have failed to agree on a plan, one already low in ambition, to implement the international minimum tax deal,” Chiara Putaturo, Oxfam’s E.U. tax expert, said in a statement Tuesday. “E.U. national interests have prevailed despite the cost-of-living crisis.”
“Some E.U. tax havens have lowered the ambition of the tax deal at the international level and Hungary has held up the implementation at the E.U. level for months,” Putaturo added. “This is a loss to ordinary people who are struggling with the cost-of-living crisis and a win to the ultra-profitable corporations.”
E.U. ministers are now reportedly hoping to strike a deal on E.U. funding for Hungary and Ukraine as well as the tax plan later this month.
During a Tuesday meeting of E.U. economic and finance ministers in Brussels, Hungary’s Mihály Varga had announced that his nation “is not in favor of” the €18 billion loan for Ukraine, which Russian forces invaded in February.
In addition to postponing a discussion of the global tax, “the ministers decided to take off Tuesday’s agenda any decision about €7.5 billion in E.U. funds earmarked for Hungary,” Reuters reported.
As the news agency detailed:
The ministers had been supposed to vote on a recommendation last week by the bloc’s executive European Commission to freeze the money, worth 65% of cohesion funds assigned to Hungary from the E.U. budget until the end of 2027, over corruption risks.
The ministers also delayed any decision on Budapest’s spending plan for another €5.8 billion envisaged for Hungary from the bloc’s economic stimulus fund, set up to help economies recover from the Covid pandemic.
Together, the funds add up to nearly 9% of Hungary’s estimated 2022 GDP.
Leaders of the Greens/European Free Alliance (EFA), a political group in the European Parliament, on Tuesday took aim at Hungarian leadership, blasting the far-right president as an autocrat.
Along with emphasizing the needs of Ukraine, Greens/EFA co-president Philippe Lamberts of Brussels declared that “E.U. leaders must stand up to Orbán’s bullying and blackmail” and called the tax deal “urgently needed.”
Fellow co-president Terry Reintke of Germany agreed, calling the minimum tax rate for multinationals “vital” and accusing Orbán of “attempting to blackmail the E.U. into freeing up funds that could be frozen.”
Orbán pushed back against the blackmail allegations in a series of tweets, calling reporting about Hungary’s veto of assistance for Ukraine “fake news” and saying his country is willing to provide bilateral aid. He added that his government aims to convince bloc members that “common E.U. debt is not the solution.”
While the OECD proposal has again stalled in Europe, some global campaigners are pushing for alternate discussions for an international corporate tax.
As Common Dreams reported last month, despite criticism from rich OECD countries, United Nations members unanimously approved an African-led General Assembly resolution to begin discussions at U.N. Headquarters in New York City “on ways to strengthen the inclusiveness and effectiveness of international tax cooperation.”
Global Alliance for Tax Justice executive coordinator Dereje Alemayehu said at the time “this is a historic win for the tax justice and the broader economic justice movement and a big step forward to combat illicit financial flows and tax abuse.”
