Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
4. The bid for a minimum global corporate income tax could be a game-changer. Critically examine. (250 words)
Reference: The Hindu
Why the question:
Treasury Secretary Janet Yellen has thrown the weight of the U.S. government behind a push for a global corporate minimum tax rate.
Key Demand of the question:
Critically examine in what way the bid for a minimum global corporate income tax could be a game-changer.
Directive:
Critically examine – When asked to ‘Examine’, we have to look into the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications. When ‘critically’ is suffixed or prefixed to a directive, one needs to look at the good and bad of the topic and give a fair judgment.
Structure of the answer:
Introduction:
Start with what you understand by global corporate income tax.
Body:
The answer body must have the following aspects covered:
Explain why a global minimum tax? – Major economies are aiming to discourage multinational companies from shifting profits – and tax revenues – to low-tax countries regardless of where their sales are made. Increasingly, income from intangible sources such as drug patents, software and royalties on intellectual property has migrated to these jurisdictions, allowing companies to avoid paying higher taxes in their traditional home countries.
Discuss the necessity for a minimum global corporate income tax.
Highlight the limitations with alternative policy options.
Discuss the concerns associated with the idea.
Conclusion:
The impact of the policy will be far-reaching impacting inequalities, provision of public services, and reduction of flight of capital from developing countries including India and that will impact poverty, thus it is worth giving a try despite the challenges and concerns.
