G20 to plug loopholes in tax systems: report
19 Jul 2013
The Group of 20 nations backed a tax plan today that would seek to plug loopholes used by multinational firms and respond to anger among voters hit with higher tax bills to cover soaring national debts.
Finance ministers and central bankers at the meeting in Moscow were though focused on charting a course towards global economic recovery, and addressing the concerns of financial markets over the impact of stimulus programmes, reports said.
The G20, a forum that took the lead in the 2008-09 financial crisis, is now faced what a multi-speed global economy where in only the US appeared to be poised to stage a self-sustaining recovery.
The engine of global growth over the years, China, has slowed down even as doubts persist over the stability of its financial system; Japan had only in recent times taken on a radical fiscal and monetary experiment, and Europe's economy continued to be shaky.
Collective efforts aimed at evening out the withdrawal of US monetary stimulus against expansionary policies have yet to bear results.
Chairman Ben Bernanke's guidance in May that the Fed may start to wind down its $85 billion in monthly bond purchases - intended to ease the flow of credit to the economy - triggered a steep sell-off in stocks and bonds, and a flight to the dollar.
Heavy capital flows from Brazil, Russia, India, China and South Africa triggered by an unexpected scale-back in US monetary stimulus had raised fears about the health of their economies, which were already showing signs of failing to live up to expectations.
With the "monetary tsunami" - as Brazil called the flood of cheap money reversing - the South American nation's president Dilma Rousseff called up her Chinese counterpart in June to discuss "coordinated action" to counter the effects of the steep appreciation of the US dollar.
With the massive capital outflows, the BRICS have reasons to worry with their currencies hammered down and increasing inflationary pressures, which forced Brazil and India to tighten liquidity at a time when their economies were underperforming.
The meeting of the 20 leading world economies this week was supposed to see the BRICS formulate joint measures to contain the fallout of a stronger dollar.
