Finance ministers are calling for more cooperation on CO2 prices

G20 countries Finance ministers are calling for more cooperation on CO2 prices

Olaf Scholz

“We all have the same goal”: Olaf Scholz. Photo: Martin Schutt / dpa / archive

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The large industrialized countries want to dry up tax havens and advance global reform to do so. But first of all, Venice was about the mega-topic of climate protection.

Vice Chancellor Olaf Scholz (SPD) and other finance ministers from G20 countries are calling for more international cooperation in climate policy.

In many countries there is currently the debate to make the emission of climate-damaging greenhouse gases more expensive, said Scholz on Friday at a meeting with his counterparts in Venice. "We all have the same goal." But that must be better coordinated internationally. The French Finance Minister Bruno Le Maire proposed an international minimum price for carbon dioxide (CO2) emissions.

Several countries recently introduced individual CO2 prices. In Germany it has been in traffic and heating since the beginning of the year. Currently, 2 euros are due per ton of CO25, but the price is to rise gradually to 2025 euros by 55. By making diesel, petrol, heating oil and gas more expensive, citizens and industry should be encouraged to switch to more environmentally friendly alternatives.

Le Maire proposed an international agreement on a lower limit for CO2 pricing. Otherwise - for example if some countries have high CO2 prices and others none at all - there is a risk of emissions and thus industrial production being shifted to cheaper foreign countries. "A fair and efficient carbon price should be a global carbon price," said Le Maire.

Scholz also emphasized that the countries must pull together globally in order to prevent so-called carbon leakage, the shift of emissions to cheaper countries. There should be no competition between different nations, which are actually all facing the same problems.

US Treasury Secretary Janet Yellen also spoke out in favor of a more coordinated approach to climate policy. However, she emphasized that there are other ways of reducing emissions besides the CO2 price. "I am deeply concerned about the lack of progress in public funding for climate protection," said Yellen, according to the speech manuscript.

At their meeting in Venice on Saturday, the finance ministers also want to take a decisive step towards a major global tax reform. It is about a minimum tax for internationally active companies and a redistribution of taxation rights.

This is to prevent companies from relocating their headquarters to low-tax countries and the countries continue to lower their company taxes in competition with one another. In addition, international companies should not only pay taxes in their home countries in future, but also where they do good business. This affects, among other things, large digital corporations, which up to now have often paid very little taxes overall.

The reform should come into force as early as 2023, but this would require resolutions in the federal states and at EU level. At the working level, 131 countries have already agreed on a tax rate of at least 15 percent - including all G20 countries. France and Germany, however, would prefer even higher taxes.

Nevertheless, Scholz had described the agreement within the OECD as “colossal progress” on the way to more fair taxation. The President of the Institute for the World Economy, Gabriel Felbermayr, also sees good opportunities for the implementation of the global reform. "If 130 countries, including all major economies, all G20 members, if they take part, then that is a very big breakthrough," he told Bavarian Broadcasting. The reform is "probably the most radical restructuring of the international tax system in recent decades".

The economist sees a lot of work to be done by the finance ministers because the tax systems of the individual countries, including within Europe, are very different. “Now it's a matter of tying down the details. And one will certainly also ask how one can unify the definition of profit. That is much more difficult than setting a tax rate of 15 percent. "

The industry association BDI emphasized that the global minimum tax must be based on the 15 percent proposed by the USA. In addition, the turnover threshold should not be set too low, otherwise significantly more German companies would be affected. Initially, it was planned that the minimum tax should only apply to very large companies with a turnover of more than 20 billion euros - a threshold of 10 billion is now under discussion. Overall, the German companies paid too high taxes, lamented the BDI. This makes them less competitive internationally.