Tax avoidance by corporations is on the agenda for this weekend’s meeting in Moscow of finance ministers from the Group of 20 advanced and emerging economies. It is a real problem, and its scale is getting difficult to ignore. The answer, though, isn’t further tax-code complication, as some governments favor, but a shift of taxes from profits to investment income.
South Korea’s won weakened and government debt fell after Deputy Finance Minister Choi Jong Ku said taxes on currency trading and bonds should be considered to help limit “speculative” inflows of capital.
For two years, European leaders have sought to tax financial transactions as a two-fer: simultaneously to raise revenue and to tame speculative market behavior. French President Nicolas Sarkozy and German Chancellor Angela Merkel emerged from a meeting in Paris today backing the idea.