Treasury chief scolds Congress for debt limit delays
Lima, Peru — U.S. Treasury Secretary Jacob Lew admonished Congress on Thursday for not moving fast enough to raise the government borrowing limit at a time of heightened fragility in the global economy.
Speaking on the sidelines of the annual meetings of the International Monetary Fund, being held for the first time in almost 50 years in Latin America, Lew said lawmakers can also add vigor to the U.S. recovery by renewing funding of the Export-Import Bank and passing a transportation bill that has languished for months.
“The question is will we muster the political will to avoid the self-inflicted wounds that come from a political stalemate,” Lew said from Peru’s capital.
Lew said finance officials from the world’s biggest economies will discuss in Lima a proposal to curtail tax avoidance by large multinational companies. The Organization for Economic Cooperation and Development estimates that anywhere between $100 and $240 billion in tax revenue, or 4 to 10 percent of global corporate taxes, is lost annually as a result of profit shifting by companies to low or no tax countries.
The new rules being proposed would seek to enhance existing tax treaties and align domestic rules affecting cross border economic activities to prevent companies such as Apple and Google from so-called tax shopping for the most favorable rates.
Lew said ideally the U.S. would clamp down on evasion by changing its own tax code.
“We ought not to have a system where tax laws create an ability for companies to legally avoid taxation. And we certainly shouldn’t have a system that tolerates illegal tax evasion,” he said.
Lew also reiterated the need for Congress to approve a reform approved by most countries giving developing nations a bigger say in running the IMF, warning that “the consequences for the United States and the international financial community are very significant if quota reform is not done.”
Asked about Hillary Clinton’s decision this week to oppose a trade agreement with 12 Pacific rim nations that she helped negotiate as secretary of state, Lew, without mentioning the Democratic presidential candidate by name, said he always anticipated that winning backing for the Trans Pacific Partnership would be a hard fight.
“We knew there was going to be a division of those who support and those who oppose,” he said. “Most of the countries in the world are not surprised there is opposition and support. And we are committed to getting the votes.”