The 2012/11/08 at 13:01
Marie Luginsland, in Germany
“Cutting debt to help growth continue and above all ensure that multinationals are taxed in their countries of origin” – this is the message brought back by Wolfgang Schäuble from Mexico City to Berlin on 5 November. Turning his nose up at the crisis, the Minister of Finance representing Germany at the G20 summit restated his desire to stick to the commitments undertaken by the States in Toronto on 26 and 27 June 2010, to halve their deficits by 2013 and to stabilise them by 2016. “Germany is going to reach this target as well as the whole of the Eurozone,” he insisted, specifying that he remained uncertain about the capacity of other countries to meet this goal. Indeed, the slowdown of emerging economies is a matter of concern for Germany, a country strongly geared towards export. Jens Weidmann, President of Bundesbank has also expressed his fears about the obstacles raised by the financial crisis in the United States as well as Japanese debt.
But both Weidmann and Schäuble remain confident about the capacity of European countries to set an example and stay on target. “We are on the right track for curbing the euro crisis. But the planet generally needs solid public financing. We cannot continually finance growth by piling up debt,” he declared.
Germany has not lingered before buckling down. While the Minister of Finance was still in Mexico City, the coalition in government resolved to reach, by 2013, a balanced budget exempt from any new debts. Wolfgang Schäuble has issued the reminder that from 2013 onwards, debt hindrances will be activated, in order to cut the country’s structural deficit to 0.35 % of the GDP.
Fighting the erosion of tax revenue
But according to Germany, companies need to follow suit. Those in the firing line are the largest groups, those that escape tax in their countries of origin by taking advantage of their subsidiaries set up in countries where taxation is more lenient. Wolfgang Schäuble and his British counterpart George Osborne have therefore launched an appeal for concerted international cooperation. The idea is not only to preserve tax revenue in the countries where profits are made, but also to maintain competitive conditions, especially for SMEs in Eurozone countries. This issue, to be examined by the OECD, is expected to open up new discussions at the G20 summit to take place in February next year. According to Germany, the establishing of an agreement between industrialised countries is a potential remedy to budgetary deficits and State debts in the face of the financial crisis