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SYDNEY and KUALA LUMPUR, Jun 29 2021 (IPS) - Too many have swallowed the myth that lowering corporate income tax (CIT) is necessary to attract foreign direct investment (FDI) for growth. Although contradicted by their own research, this lie has long been promoted by influential international economic institutions. ‘Beggar-thy-neighbour’ policies The early 1980s’ economics ‘counter-revolution’ impacted the ‘Washington Consensus’ of the US federal government and the two Washington-based Bretton Woods institutions (BWIs) – the International Monetary Fund (IMF) and the World Bank. Anis Chowdhury Thus, the rise of ‘supply side’ economics in the US – advocating lower direct taxes on income and wealth – influenced the world. Without evidence, IMF researchers justified its policy advice thus: “The complete abolition of CIT would be the most direct application of the theoretical result that small open economies should not tax capital income.”

Kuala lumpurUnited statesNew south walesUnited kingdomSouth africaJanet yellenAnis chowdhuryDavid malpassJomo kwame sundaramLobbies block international tax cooperationDevelopment aidInternational monetary fundWorld bankEven organisation for economic cooperationFinancial crisisTerraviva united