President Daems, distinguished Members of Parliament, Ladies and Gentlemen,
It is my great pleasure to join you today for this enlarged meeting of the Standing Committee of the Parliamentary Assembly of the Council of Europe (PACE).
I wish to extend special thanks to my friend Georges Katrougalos, the rapporteur of this year’s report on the OECD work on taxation of the digital economy, which you will be debating soon.
Today, I will be focusing my remarks on the three key issues: digitalisation, taxation and the green recovery, but first allow me to briefly outline the economic outlook.
The Economic Outlook
The COVID-19 pandemic has unleashed the worst health, economic and social crisis of our lifetimes, claiming over a million lives. We now expect global GDP to fall by 4.5% this year. Some of the hardest hit G20 economies will see their GDP shrink by 10% or more.
The actions of governments and central banks must continue focusing on a strong recovery. Maintaining a very accommodating macroeconomic policy remains essential.
Let me now turn to some of the issues that you will be discussing over the next few days.
Ensuring Digitalisation and AI have a key role in the crisis’ response
First, COVID-19 is accelerating an already rapid digital transformation. Digital tools have helped many economies and societies avoid a complete standstill, keeping businesses running, children learning and families connected.
Artificial Intelligence (AI) is playing a key role in every aspect of the crisis’ response: from detecting and diagnosing the virus, to supporting the search for a vaccine. I am aware that you will be debating no less than eight reports on AI in the coming days.
Our biggest responsibility as policymakers is to think carefully about how to ensure responsible stewardship of trustworthy AI.
This is why, last year, we launched the OECD AI Principles, the first-ever intergovernmental standard to ensure AI systems are designed in a way that respects the rule of law, human rights, democratic values and diversity. Our AI Policy Observatory is helping countries put these Principles into practice. We are also supporting the Global Partnership on AI.
And of particular interest to this group: as part of our OECD Global Parliamentary Network, we have established the OECD Parliamentary Group on AI, a legislative learning hub created just for parliamentarians – and its membership and substance are enhanced by PACE rapporteurs on AI.
Delivering a global agreement on tax
Second, the OECD has been hard at work to build a fairer and more transparent international tax system, tackling BEPS issues as well as the bottlenecks that are being faced by developing countries when it comes to taxing multinationals.
We are also making tremendous progress on delivering a global solution to the tax challenges presented by our digitalised economies, as well as delivering a global minimum tax. Just a few hours ago the 137 members of the OECD/G20 Inclusive Framework on BEPS released the ‘Blueprints’ of the two-pillar approach. We are inching closer to the finish line but not quite there yet as political differences remain to be bridged and further technical issues worked out. Political compromises are needed so that a full-fledged consensus-based solution can be delivered by mid-2021.
Our work on Automatic Exchange of Information (AEOI) is also helping to boost transparency. In 2019, AEOI resulted in the exchange of 84 million offshore accounts, with a total value of around 10 trillion EUR. This adds to the over 102 billion EUR in additional revenues identified through voluntary compliance programmes in advance of the AEOI.
Focusing on a green recovery
And last but not least, the recovery is an opportunity to build back the economy in a way that protects the environment, public health and safeguards people’s well-being.
This means restructuring key sectors toward low emissions, job creation and boosting renewable energy, energy efficiency, ecosystem restoration and organic agriculture.
Finance also has a critical role to play in support of a green and sustainable recovery. Large flows of private capital will need to be directed to new sectors and activities. The rise in Environmental, Social and Governance (ESG) investing is a positive development in this respect.
And we also need the strength that comes from multilateralism. This health crisis and the most pressing climate and biodiversity challenges are transnational in nature, no one country can face them alone. Stronger international co-operation will help to speed up a strong, green, inclusive and resilient recovery.
Ladies and Gentlemen,
The COVID-19 pandemic is a stark reminder of the transformational changes needed to build back better. But we can only change course if we act together. Let’s harness the transformative power of collective action to create better policies for better lives.
You can count on the OECD to continue working with you, and for you, to shape the post-COVID-19 world in an inclusive, green and resilient manner.