Commonwealth finance ministers have resolved that member countries should levy taxes on digital commerce to tackle debt.
According to the ministers, global trade has intensified, but paradoxically, global debt has risen, to an estimated $19 trillion.
The finance ministers observed that the debt increase is resulting from the growing digitalisation of commerce which has made it difficult for countries to place taxes on digital transactions.
They agreed that the Commonwealth would participate in ongoing discussions at the Organisation for Economic Cooperation and Development, OECD, on behalf of smaller states.
This could enable countries to benefit by taxing large tech giants, even if they do not operate within their jurisdictions.
These decisions were taken during the 2019 Commonwealth Finance Ministers’ Meeting (CFMM), which held in Washington DC under the theme “Preventing Debt Crisis: The Role of Creditors and Debtors.”
Speaking at the event, Commonwealth Secretary-General, Patricia Scotland, said:
“The Commonwealth has a distinctive contribution to make, by bringing together nations with developed and developing economies to agree on collective approaches and action towards a fair and equitable global system for taxing multinational businesses in a swiftly digitalising economy.”
“We need a rule-based system that is inclusive, transparent and efficient so that all countries have a means of collecting revenue and are thereby able to avoid accumulating excessive debt.”
“It goes hand in hand with accelerating the gains to be made by addressing climate change and making progress towards achieving sustainable development goals,” she added.
During the meeting the Commonwealth presented on its flagship debt management system, ‘Commonwealth Meridan,’ used by 63 countries to manage their debt, which stands at $2.5 trillion.
The ministers also revisited some Commonwealth initiatives, including a disaster risk portal which will inform member countries on available funds to manage disasters.
Chairing the meeting, Cyprus Finance Minister, Harris Georgiades, said: “Disruptive technologies are challenging the financial system by increasing competition and reshaping conventional business model, thereby fuelling the creation of a whole new kind of financial ecosystem.” The Commonwealth is hopeful that considerable progress will be witnessed on the issues and initiatives discussed before the next Commonwealth Finance Ministers meeting to be chaired by Botswana in 2020.