By Brooks M. Deering, The Chicago Times
June 17, 2022
BUDAPEST — Hungary’s Finance Minister Mihaly Varga announced that his nation will not support a minimum global corporate tax rate.
The European Union was expected to finalize an agreement Friday to set a minimum corporate tax rate of 15%, in accordance with a 140-nation agreement reached in October of 2021 but will now table the agreement as Hungary refuses to take part in the anti-competitive scheme. According to the EU treaty all member nations must agree on proposed laws before passage.
“Hungary cannot support the adoption of the global minimum tax directive at this stage. The work is not ready. I think we have to continue the effort to find a solution.” Varga said in meeting of finance ministers.
According to leading economists, a minimum tax rate would stifle competition since corporations (and people) will seek to do business in a low tax burden environment. In fact, setting a 15% minimum tax will lock in the cost of paying the tax which the corporation will then pass along to the consumer. In addition, setting a minimum tax will ultimately harm poorer nations since they will not be able to offer rock bottom corporate tax rates to attract corporation to invest in their nation, thus preventing the creation of jobs and wealth.