“Hungary is wise to reject the global minimum tax proposal that would significantly damage the valuable tax competition among countries and would cause undue harm to businesses, workers, and economies around the world,” the Americans for Tax Reform advocacy group says. The organization’s president, Grover Norquist, praised the Hungarian government for opposing the minimum corporate tax deal proposed by the Organisation for Economic Co-operation and Development (OECD) and supported by more than 100 countries.
“Cartels that keep prices high hurt consumers,” Norquist said. “Creating a Tax OPEC of governments to avoid tax competition is bad for citizens and taxpayers. Competition drives out self-serving rent-seekers in business and in government.”
In May, the European Parliament issued a statement backing the December 2021 agreement of the OECD and G20 member states which intends “to tackle tax challenges raised by the digitalisation of the economy.” The agreement involves “a unified approach on taxation rights concerning the largest and most profitable multinationals,” and the introduction of a 15 percent minimum corporate tax rate “to mitigate the practices of profit-shifting to jurisdictions with no, or very low, taxation.”
The European Commission has published a proposal on how the EU could turn the reform into law by 2023, and a report put forward by the economic and monetary affairs committee stated that the directive would apply to companies with a turnover of at least 750 million euros a year. The bill would require the unanimous support of all 27 member states.
On Wednesday, Hungary emerged as a late opponent to the proposed tax, according to an EU diplomat. A Europe-wide deal had been expected on Friday after Poland dropped its opposition, but the deal now allegedly seems unlikely.
In a video posted to his Facebook page, Minister of Foreign Affairs and Trade Péter Szijjártó said the global minimum corporate tax would have an “exceptionally severe impact on the European economy,” due to Europe’s current challenges, including inflation, high energy costs, and an ongoing war. He said the tax would be to a significant obstacle to economic success, especially if Europe was the first to implement it. Hungary’s economic success, he added, stems from the government being able to lower taxes.
Featured photo illustration via Péter Szijjártó’s Facebook page