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OPINION

Which is the fairest mirror of them all?

Which is the fairest mirror of them all?
Which is the fairest mirror of them all?


If you have a question for Luke about design and stylish living, email him at lukeedward.hall@ft.com. Follow him on Instagram @lukeedwardhall

I want to make my house feel brighter and lighter and so I am looking for mirrors to place in most of my rooms. I’m not sure where to start. Can you help?

A room doesn’t feel truly complete without a mirror or two, I believe. Not only do they provide extra light and brightness, they are also brilliant accessories in their own right. I enjoy the process of sourcing and placing mirrors and experimenting with colour and material contrasts, sizes and shapes.

In our sitting room in the country, for example, we bought when we moved in a tall and thin circa 1910 japanned mirror in red lacquer (pictured above, from London’s Ebury Trading) to hang above the fireplace. Its thin red border is a welcome contrast to the room’s grassy olive-green walls and the Queen Anne-style rounded shape is quietly elegant.

The slender size gave us ample space to add candle sconces and framed pictures on either side. A wider mirror would have filled the space and looked great too, but the verticality of this thin mirror and the surrounding arrangement of pieces pleases me.

I like mirrors of almost all shapes and sizes, and I don’t have rules about what to choose and where to hang. (Although overmantel mirrors generally belong above mantels, and landscape-shaped mirrors are not usually to my taste.)

What I must say is: go bigger rather than smaller, as a too-small mirror in a space feels mean. And, as with pictures, don’t hang too high. You don’t want a mirror floating high on a wall, untethered. It should feel grounded to whatever is beneath it, whether floor or basin or furniture.

A shield-shaped mirror from the 1960s
A shield-shaped mirror from the 1960s, available at Pamono

A French faux bamboo-style mirror, c1920 available at Tom Scott Antiques
French faux bamboo-style, c1920, available at Tom Scott Antiques

I do, unsurprisingly, love an old mirror. Old glass can often be beautiful; I love its patina, foxing and spots and smudges. It is possible to buy new glass that has been treated to look old, and some smart versions can be found, but more often than not the effect doesn’t look quite right to me.

If you fancy designing your own mirror using this kind of glass, take a look at GX Glass, which makes a nice Venetian glass with a subtle, gently mottled appearance.

So, where to start? The range of choice can feel dizzying. Here are some of my favourite ideas, which I hope might provide some initial inspiration. I like inexpensive faux-bamboo mirrors in little loos — they often seem to be just the right size to hang above a small sink. Tom Scott Antiques often has a good range in stock.

A shield-shaped mirror is a wonderful thing, particularly Italian ones made in the 1950s or 1960s with thin metal borders. Search pamono.co.uk for good examples. London’s Retrouvius is selling a charming mini version in a wooden frame, with the perfect amount of patina across its surface.

I adore also a gilt-wood mirror, but be careful to avoid the Liberace look. How? I think one wants one’s gilding to be fairly dull, not too brassy. If you’re searching for something a bit ritzy, you want fine, elegant scrolling, not bulbous blobs.

LVS Antiques is selling a very large and rare George I gilt-wood and gesso mirror that features a broken scroll arched pediment with carved eagle heads, cresting to a feathery foliate crown. It is utterly marvellous; I want it madly.

Retrouvius is selling a charming mini shield-shaped mirror
Retrouvius is selling this mini shield-shaped mirror

The rare George I gilt wood and gesso mirror that features a broken scroll arched pediment at LVS Antiques
A rare George I gilt-wood and gesso mirror at LVS Antiques: ‘I want it madly’

If money were no object, I’d be first in line for a Murano moment. See the pair of 19th-century Venetian mirrors on offer from a dealer in Long Island City, via 1stdibs. These are etched with scenes of figures in landscapes and trimmed with pink and green glass flowers. They look as if they have been sculpted entirely of sugar by woodland pixies.

At the other end of the spectrum in terms of age, expense and extravagance, I’m a huge fan of the mirrors made by Habitat when it first started out. These feature thick plastic borders in a range of colours. They’re simple, fun and bold, and look great in bathrooms. Habitat should consider bringing them back. They come up on eBay sometimes — this is where I found my square emerald-green model.

A pair of 19th-century Venetian mirrors at 1stdibs
A pair of 19th-century Venetian mirrors at 1stdibs

The French company Atelier Vime produces lots of wonderful things from wicker and rattan, made by craftsmen using materials grown locally in Provence. I very much like its large natural rattan-edged mirror. The soft tones and textures of the rattan contrast beautifully with the glass, and its size would create a grand statement in any room — above a console table in a hall, perhaps?

Atelier Vime’s rattan-edged style mirror
Atelier Vime’s rattan-edged style

I mentioned the idea of designing your own mirror, and this is something I certainly recommend if you fancy the challenge of creating a particular shape and size. For my Paris hotel project, last year I designed a mirror inspired by William Kent’s ornate gilt-wood pieces, recreated in simple off-white painted MDF, to which I added decoration in black paint.

Not exactly fit for the V&A, but it worked just fine in a foyer around the corner from the Gare du Nord.

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OPINION

UK’s lockdown easing should be slowed

UK’s lockdown easing should be slowed
UK’s lockdown easing should be slowed


It has long been predicted that once Britain reopened there would be another wave of coronavirus cases. One reason is that the vaccination programme, despite good headway, is not yet available to everyone — in England those aged between 25 and 29 were only invited to book their first jabs this week. Even when fully vaccinated the shots cannot offer complete protection. Vaccine hesitancy has been limited in the UK, yet a resurgence of infections when Britons began to socialise again was almost certain.

There have also been failures of border control — the government was slow to put India on the “red list” despite a jump in cases and has generally dragged its feet over travel quarantining. That allowed the more transmissible Delta variant to spread and become the dominant form of the virus. Cases are now rising exponentially, as is the number of people in hospitals with the virus, albeit at a slower pace.

For this reason the full relaxation of restrictions, scheduled in England for June 21, should be delayed for at least a fortnight and replaced with a partial reopening. That would provide breathing room for already-stretched hospitals and allow time for substantially more people to get the second dose of the vaccine. The data so far suggests that receiving one dose offers less protection against catching the Delta variant compared with others circulating in Britain.

While the government has acted too incautiously in the past — waiting until the last moment to introduce lockdowns or trying to “have its cake and eat it” on restrictions — the context is different this time. The progress of the vaccination programme may have broken the tight link between cases, hospitalisations and deaths. Vulnerable groups who have received both doses of vaccination are relatively more protected — much of the current rise in cases is among the unvaccinated young who have stronger immune systems.

Nevertheless, the young can still get seriously ill and a surge in infections could overwhelm hospitals, already dealing with a backlog of delayed operations and treatments from previous lockdowns. Delaying could also prevent the country from going backwards and being forced to return to a more restricted society.

The remaining restrictions undeniably impose high costs on businesses. Nightclubs are closed, as are most theatres — composer Andrew Lloyd Webber has said that the government will have to arrest him to prevent his theatres opening. While Britons can already socialise outside, visit pubs and go to some theatres and sporting venues, they must still do so while social distancing — this reduces capacity and raises costs. Many have not reopened, believing that it would be unprofitable in such conditions.

Eventually vaccination certificates may provide a way out of the bind, allowing those who have received both doses of the vaccine to attend indoor venues en masse. For now, the idea is a divisive distraction: questions over discrimination can be more easily rebutted once everyone has had the chance to be jabbed, though privacy concerns may persist. In the meantime, nightclubs will struggle without the under-30s, as will many pubs.

Depending on the data, including the results of trials of “Covid-secure” events, some restrictions could still be eased on June 21. The lifting of others should be delayed, especially the least intrusive measures such as wearing masks indoors. Prime Minister Boris Johnson told England in February that the country was travelling on a “one-way road to freedom”: it is far better to go carefully than to go backwards.



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OPINION

Carbon counter: solar panels still shine in gloomy climates

Carbon counter: solar panels still shine in gloomy climates
Carbon counter: solar panels still shine in gloomy climates


Europe fell under the moon’s shadow during a partial solar eclipse this week. Skygazers were not the only ones paying close attention. A summer eclipse meant a sudden halt to solar panel power output just as it reaches its peak.

Panels have been rolled out across the continent in recent years in a bid to lower carbon emissions. The scale of home carbon footprint reduction depends on two factors — how carbon intensive the local electricity grid is and how much sunlight the panels receive.

For comparison Lex has considered two countries with notoriously unsettled climates: the UK and Germany.

Carbon footprint of UK home electricity use: UK grid only electricity (Kg CO2e), With 4kW solar system (Kg CO2e), Saving with solar (% of grid only footprint)Solar power by country; Solar capacity (2020, GW), % of electricity consumption (2019)

Germany has smothered itself in solar panels, adding more last year than at any time since 2013. Last year they contributed a tenth of the country’s total electricity. Most generation happens in the summer. Owners will know that this is a peak time when their panels feed into the grid to earn their keep.

In our exercise carbon saved in the grid returns to homeowners. With that assumption the carbon footprint of an average family home consuming 3900 kWh per year is covered almost entirely by a 4kw home solar system in both countries. Due to less sunlight, 12 or so panels work about a tenth less effectively in the UK compared to Germany. But the UK’s cleaner power grid — about half the carbon intensity of Germany’s — means smaller carbon footprints from powering British homes.

Including those calculations, plus the carbon cost of production for panels, our 4kw home array saves almost 700kg of CO2, or 84 per cent of a UK home’s annual power-related carbon footprint. Germany’s dirtier grid lifts the CO2 saving to 90 per cent. Even in murky settings, using solar can boost a home’s carbon credentials. 

The Lex team is interested in hearing more from readers, especially those relying on solar panels. Please tell us what you think in the comments section below.



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OPINION

Rioja rediscovered: unusually mature white wines at bargain prices

Rioja rediscovered: unusually mature white wines at bargain prices
Rioja rediscovered: unusually mature white wines at bargain prices


Even the most dispassionate wine correspondents fall in and out of love with different categories. I adored the wines made in California in the 1970s, for instance. Then I tired of the much less distinctive and super-ripe fruit bombs that typified California wine in the 1990s and early 2000s, especially when they seemed so expensive compared with similar wine. Now I’m enthused by a new generation of west-coast producers and their much greater range of styles.

Likewise, there was a phase in the 1980s when burgundy was often uncomfortably tart, thin and underripe or just plain dull. It has become much more reliable this century, as well as more expensive. Despite the prices, I am considerably more enthusiastic about burgundy — both red and white — than I used to be.

One category to which I have been reconverted recently is white rioja. When I first encountered it in the late 1970s, there were memorable examples, such as Castillo Ygay from Marqués de Murrieta. These were a deep apricot colour, heady with beeswax and lemon and clearly capable of ageing every bit as well as white burgundy. Then came the novelty of cool fermentation in the 1980s. The new method was designed to preserve fruit and freshness, but often at the expense of character. Too many white riojas became just crisp, light and featureless.

But tasting a selection of current offerings has rekindled my interest. Many examples are genuinely distinctive. They are often quite mature dry whites designed for drinking with food more than merely quenching thirst. There’s the beeswax and lemon again, sometimes a hint of lanolin together with a rich, creamy texture, but real refreshment too. Like Rioja’s reds, many of the successful wines are aged in oak barrels and some seem (unusually) proud of it. Good white rioja appears to have the guts to stand up to oak ageing.

Only about 10 per cent of the vines in Spain’s most famous wine region are light-skinned and Viura is by far the most planted. I have long been a fan of this grape, which is known as Macabeo in the rest of Spain and as Maccabéo or Maccabeu in southern France. It can make serious wines worth ageing, as shown by the likes of Domaine Gauby, Domaine de l’Horizon, Lafage, Olivier Pithon and Le Roc des Anges in Roussillon.

Almost half of Rioja’s Viura vines are more than 40 years old and therefore likely to produce small quantities of characterful grapes. They call Rioja’s other traditional white wine grape Malvasia. It was typically blended with Viura, and 40 per cent of these vines are more than 20 years old.

But in 2009, the local authority in Rioja, the Consejo Regulador, decided to encourage growers to plant the international varieties Chardonnay and Sauvignon Blanc, which risked robbing white rioja of its local character. Together these two varieties now constitute 6 per cent of all white wine grape plantings. At the same time, the authority encouraged growers to plant the more truly Spanish varieties Garnacha Blanco (Grenache Blanc), Tempranillo Blanco, Maturana, Turruntes and Verdejo. Of these new varieties, Tempranillo Blanco has been by far the most popular, already accounting for almost 13 per cent of all of Rioja’s white wine grapes, even though this pale‑skinned mutation of Rioja’s dominant red wine grape was first identified as recently as 1988.

I loved the fact that so many of the white riojas I tasted lately had real local character and did not seem “international” at all. The most traditional of the lot — perhaps too distinctive for some palates — are the two white bottlings produced by the López de Heredia sisters, who run the historic bodega in Haro. This bodega was founded in 1877 just beside the station, where barrels of wine would be loaded on to trains destined for France, whose own vineyards were then suffering from the crippling effects of mildew and the phylloxera plague that only reached Rioja in 1901.

López de Heredia’s whites are aged far longer than most wines today and then released at really very kind prices. At present, a Hong Kong merchant is offering their 2003 Viña Tondonia Blanco Reserva for just £40 a bottle, while a US merchant is offering the 2002 Gran Reserva for $85. In the UK, the 2010, 2011 and 2012 vintages of its stablemate, the single-vineyard Viña Gravonia, sell for about £24 a bottle. Try finding any other 10-year-old wine at this sort of price.

A good example of Rioja’s American oaked style is provided by Bodegas Riojanas’ Monte Real 2020, which was fermented in barrel and still carries very obvious, if unfashionable, traces of sweet vanilla oak that combine well with the fresh citrus character of Viura.

You might expect the head chef of The Quality Chop House in London, which is co-owned by my son Will Lander, to favour red wines. But Shaun Searley is a huge fan of white rioja. “For me, it is a wine that is so complex that not only can it be paired with food, it is perfect on a hot day just on its own,” he says. “I love the rich, almost caramelised, buttery flavour profile and the sharp candied lemon-skin finish.” He recommends it with “a big plate of hot shellfish . . . or simply an aged Comté”.

Indeed, restaurateurs are generally pretty keen on white rioja because they can offer their customers unusually mature white wines that go with a wide range of foods at bargain prices. Why not take advantage of these bargains yourself? I have listed some favourite examples in ascending order of richness and funkiness so that you can wean yourself on to the style gently.

Recommended white riojas

Beronia 2019 13%
£9.16-£9.95 The Drink Shop, Songbird Wines, Winedirect, Master of Malt

Hacienda López de Haro 2020 12.5%
£10.99 Majestic Wine

Santalba, Viña Hermosa Viura 2019 13%
£15.90 Catchpole Cellars

• CVNE, Monopole 2019 13%
£11 RRP Noble Green Wines, Hoults Wine Merchants, Flagship Wines, Luvians, Shenfield Wine Co

Muga 2020 13.5%
£10.50 The Wine Society, £12.99 Majestic Wine, Ultracomida, Christopher Piper Wines and others

Izadi 2019 13.5%
£15.95-£16.99 Noel Young Wines, Loki Wine, Grand Cru Company

Riojanas, Monte Real 2020 12.5%
£14 RRP Stewart Wines, First Class Products

Ortega Ezquerro, Don Quintín Ortega 2018 13%
£16.95 Jeroboams

Finca Allende 2016 13.5%
£26.99 Bancroft

Contino 2017 Rioja 13.5%
From £20.99 Roberts & Speight, VINVM, Dulwich Vintners, Field & Fawcett, Evington’s, Hedonism

CVNE, Monopole Clásico 2017 13.5%
From £24.50 Winedirect, Hedonism and other independents

López de Heredia, Viña Gravonia 2011 12.5%
From £22.90 Field & Fawcett, Vin Neuf, Hennings Wine, Bottle Apostle, Handford Wines

Tasting notes on Purple Pages of JancisRobinson.com. More stockists from Wine-searcher.com

Follow Jancis on Twitter @JancisRobinson

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OPINION

Undertones of The Clash in great inflation debate in markets

Undertones of The Clash in great inflation debate in markets
Undertones of The Clash in great inflation debate in markets


Jeffrey Gundlach of DoubleLine Funds this week added some colour to his monthly slide deck presentation of market and investment talking points. The bond manager and a former punk rock drummer paid homage to The Clash’s second album Give ‘Em Enough Rope.

The cover features the body of a dead cowboy left stranded in the desert being attacked by vultures. Gundlach suggested there might be a similar fate awaiting bond investors if a current spike in prices in the economy persists, quipping the cover “might be a teaser for coming inflation pressure”.

No topic dominates investor concerns and conversations more than that of inflation at the moment. It frames both the near term view over the second half of the year and beyond and for good reason. By any measure, prices of both bonds and equities are sitting at rich levels and their high valuations have created a financial system that would not enjoy even a modest inflation shock sustained beyond this year.

If you own bonds, a higher pace of sustained inflation over time erodes the value of their interest payments and represents a loss in real terms. Although equities appeal to some as an inflation hedge, this relies on owning those companies able to grow their revenues, earnings and dividends at a faster pace.

Investors are debating whether the surge in prices at both a producer and consumer level will prove transitory, as the US Federal Reserve believes, or become entrenched.

Much of the angst over medium term inflation pressure becoming hotter is fuelled by the backdrop of aggressive fiscal and monetary policy. This potentially combustible mix has a policy additive from a Fed prepared to tolerate a higher pace of inflation beyond its target of 2 per cent for an unspecified period.

Summing up the present mood of uncertainty among investors, Gundlach said: “How does anyone know it will be transitory?” and referred to a chart of US consumer prices that after “going sideways in the last ten years,” is now showing “a breakout”.

Line chart of  showing US consumer core inflation pressure returns to the early 1990's

This notable uptrend gained further momentum last month, with US core prices, excluding food and energy, rising by 3.8 per cent over the past 12 months to May, the fastest pace since 1992, and after a 3 per cent annualised jump in April. Sharply higher prices for used cars, followed by airfares, highlighted how consumer demand is overwhelming supply in various sectors as the economy reopens.

The message from markets, at least for now, affirms the Fed’s stance that consumer price pressure is likely to be transitory. Equities, led by the S&P 500, edged up 0.2 per cent to close at a new record high and the 10-year Treasury interest rate eased to its lowest level in three months, below 1.5 per cent.

One explanation for why a transitory inflation outlook holds sway in markets is that any shift towards a sustainably higher trend will only become apparent over the next six to 12 months. In the interim, investors and central banks will carefully monitor a range of indicators.

Eventually demand and supply imbalances become smoother. But this time around, the process may take longer to play out, pushing the definition of what is considered transitory price pressure as consumers flush with lockdown savings make up for spending time lost in the pandemic.

Line chart of 10-year benchmark eases to a three month low showing US bond market views inflation surge as transitory

Playing a key role is wage growth. At a time of elevated unemployment, reports of labour shortages have been resounding. In May, nearly half of US small business owners reported unfilled job openings, and they “are offering higher wages to try to remedy the labour shortage problem”, according to the National Federation of Independent Business.

Again there is an argument that higher wage growth will prove short lived, with expectations that more people will seek work after September once government assistance ends. But a cause for concern is that rising consumer prices may encourage workers to seek higher wages and in turn companies will pay up and then raise prices. A wage and price spiral typified economies during the 1970s.

“The normal stickiness of wage trends has been overwhelmed by today’s exceptional economic conditions, and firms may believe they have more pricing power than we originally assumed as well,” said Lou Crandall, economist at Wrightson Icap.

While the US is running ahead in reopening its economy, there are grounds for seeing a similar dynamic in other countries as they follow suit. This would likely exacerbate global supply chain pressures and should underpin commodity prices, led by oil.

In turn that will keep bond market expectations of inflation elevated and leave investors in a corridor of uncertainty. Investors will have to bet on how much inflationary pressure central banks are willing to tolerate before they act.

“It will be important for investors to monitor not only the strength of the rebound but, perhaps more importantly, its duration,” said Dario Perkins, global macro strategist at TS Lombard in a research note.

This will not be easy. There will be many more “teasers” of inflationary pressure in coming months.

michael.mackenzie@ft.com



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OPINION

In Treatment: perfect therapy for discomfiting times

In Treatment: perfect therapy for discomfiting times
In Treatment: perfect therapy for discomfiting times


For parts of 2020, I lived vicariously through a friend’s therapy sessions. Every 10 days or so we would catch up on the phone, and she’d at some point share a few insights that she had with her therapist. I listened as a good friend but I confess, during the intensifying months of the pandemic and lockdown, I was hungry for any crumbs that could help me parse the way I was feeling.

I’ve always believed in the benefits of getting therapy, and I’ve used it at different points in my life, whether to process grief over something or to work through seemingly new issues unearthed from an unforeseen experience. For me, therapy is neither the endlessly embarrassing, self-exposing nightmare depicted in popular culture, nor a magic wand cure-all for our distress. Emotional and mental suffering is part of the human experience that visits all of us. And yet I think many of us still struggle to even entertain the thought that therapy might be something we’d like to explore.

So when I saw the strangely soothing trailer for the new series of In Treatment — the award-winning Nigerian-American actress Uzo Aduba sitting in a brown leather chair staring into the camera, like a waiting therapist — I was duly intrigued. The HBO drama series, recently revived for a fourth series after a 10-year hiatus, is about a psychotherapist who sees her own patients three days a week, then on the fourth day becomes the patient and sees her sponsor, the therapist figure in her life. It is a timely return for the show, given that the world is still reeling from the effects of the pandemic, with people trying to figure out how to make sense of the emotional and mental fallout. There’s hardly a sense of “normal” to which to return. A December 2020 US Census Bureau survey revealed an 11 per cent year-on-year increase of people showing symptoms of anxiety or depression.

As I was unfamiliar with the original series, I went back to the first episodes starring Gabriel Byrne as Baltimore-based psychotherapist Dr Paul Weston. I was hooked within two episodes, and after watching the whole of season one, I skipped ahead to the new series, which picks up in present-day Los Angeles, during the pandemic. The patients here are — among other problems — trying to adjust to an opening world. Alongside the show, there’s a complementary podcast, featuring an actual therapist, but which begins with a necessary disclaimer that the podcast “is not a substitute for therapy”.

Gabriel Byrne, left, as Baltimore-based psychotherapist Dr Paul Weston
Gabriel Byrne, left, as psychotherapist Dr Paul Weston © Alamy

That’s clearly true, but I found that the value of the show, including the earlier series, remains. The stories follow the lives of a cast of characters diverse in age, gender, race, ethnicity, sexuality and socio-economic standing. They each present with their unique backgrounds and set of issues, and seem to offer a wide enough range for many viewers to likely catch threads that look similar to their own lives.

There’s a married couple questioning one another’s love and support and dealing with differing views on finances and whether or not to have another child. There’s the single professional woman who struggles to commit to a healthy relationship. Or the high-achieving man who’s never acknowledged the pain of an emotionally absent but demanding father, or how his parents’ marriage may have led to his own unhealthy professional and personal relationships.

The actress Uzo Aduba. The psychotherapist sees her patients three days a week, then on the fourth sees her own therapist
Uzo Aduba, star of the fourth series of ‘In Treatment’

Regardless of the patient or the problem, what seems to slip through the screen are recognisable aspects of our common human dilemmas. Characters in one way or another reveal resistance to and fear of vulnerability. Their situations offer a reminder that many of us inherit family narratives, beliefs and traumas, and that there are often things we lack the courage to face in ourselves, barriers we put up to discourage intimacy, and lies we tell ourselves to remain in our comfort zones. And in the characters’ impatience towards the therapist, we see reflected our tendency to want quick-fix answers to our singular concerns. We can’t easily face the reality that healing often involves more pain, discomfort, inconvenience and courage than we bargained for. At one point early in the first season, in trying to help a frustrated patient understand the nature of the process, Byrne’s character says, “All I can do is get you to confront your feelings . . . that’s it”.

Watching the series, I was reminded of how easy it seems for us all to become adept at layering our discomfort with all sorts of metaphorical coverings. It’s as if we learn to live with our wounds until they become part of the identity that we are most secure in, and the thought of changing them bears the harder work and perhaps the seemingly greater pain.

I found myself nodding and “ah-ha”-ing as I watched, because the writing is clever enough to show how people can experience deep pain and yet carry their unhealed wounds without fully recognising the source or the impact. One thing In Treatment does is remind viewers how often it’s in the slips of our conversations or the sharing of our stories that our complex selves are revealed. Perhaps one aspect of a helpful therapist is their ability to catch these slips, enabling us to see and understand the very things we need to find the courage to confront.

Enuma Okoro writes weekly for Life & Arts

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OPINION

G20 could improve on ‘one-sided’ global tax reform

G20 could improve on ‘one-sided’ global tax reform
G20 could improve on ‘one-sided’ global tax reform


The author is chief executive of the Tax Justice Network

Following the G7 finance ministers’ headline-grabbing commitment to major international tax reforms last weekend, agreement is looking less clear cut. Subsequent moves for opt-outs — from the UK’s hope for a carve-out for finance to China’s concerns over its special economic zones — have been seen by some as threatening the initiative. But this jostling is entirely necessary — and even positive.

These are likely to be the biggest reforms of international tax rules for a century. They may generate more than a trillion dollars of additional revenues. Political engagement at national and international levels is critical to obtaining a fair outcome and ensuring commitment from the parties.

The OECD process to reform international tax rules has been running since January 2019 and will probably conclude at the October G20 meeting. But the latter’s July meeting will be pivotal in setting the basis for agreement on the scope and ambition of new taxing rights over companies (“pillar one” of the reforms), and on the base and rate for the global minimum tax (“pillar two”).

The same issues arise with both: how large will the additional revenues be, and who will receive them? And how far will countries’ domestic policies be constrained, and with what costs?

Pillar one is relatively small, but politically salient. Public anger over the failure to tax multinationals focuses on large tech companies that can outcompete more highly taxed local businesses. Proposals from the G24 group of lower-income countries and the African Tax Administration Forum envisage apportioning all global profits according to the location of multinationals’ business activity.

But the OECD has narrowed this substantially, and the G7 has narrowed it still further. Now only 100 multinationals are likely to be affected, and only a fraction of their profits above a 10 per cent margin will be apportioned to their sales jurisdiction (with no weighting for the jurisdictions where employment occurs). The OECD estimates this will bring in additional revenues of $5bn to $12bn a year, a 2-5 per cent reduction in the estimated annual losses of $245bn due to profit shifting.

The benefits of pillar two are much greater. The OECD estimates that a global minimum tax rate of 12.5 per cent, which would apply to perhaps 8,000 multinationals, could yield nearly $100bn a year in additional revenues. Our estimates show a 15 per cent minimum rate could raise as much $275bn a year. A 21 per cent rate, favoured by the Biden administration, or a 25 per cent rate as recommended by the Independent Commission for the Reform of International Corporate Taxation, would raise far more.

The OECD approach privileges headquarter countries. This means that if a French multinational shifts profits out of Brazil to benefit from Bermuda’s 0 per cent tax rate, it would be France that could “top up” the taxes on that profit to 15 per cent. As most of the largest multinationals are headquartered in OECD countries, the majority of the benefits would go to them. G7 members, with 10 per cent of the world’s population, stand to receive more than 60 per cent of the additional revenues.

The alternative proposed by the Tax Justice Network, the Minimum Effective Tax Rate (METR), would allocate undertaxed profits according to the location of the multinationals’ real activities. They would be taxed at the national headline rate, rather than at the agreed global minimum, to avoid incentivising profit shifting. A 15 per cent rate would raise as much as $460bn in additional revenues. For major G20 members outside the G7, the difference is stark. At a rate of 15 per cent, India could gain $13bn rather than $4bn; and China $72bn rather than $32bn. Additional revenues would double or even triple for countries such as Brazil and South Africa.

Like China, many countries worry that the benefits of reduced tax abuse could offset their ability to offer companies incentives to locate real activity. This is unlikely if the OECD insists on privileging headquarter countries. Other states, such as the UK, want to protect “their” multinationals — but competing for loopholes would erode the benefits to be had from co-operation.

The global minimum tax poses a serious threat to the business model of many jurisdictions — such as Ireland, with its average effective tax rate for US multinationals of just 2 per cent. But the model is antisocial and unsustainable.

There is a grand bargain to be struck. Fundamentally, the reforms are about renewing fiscal sovereignty through greater co-operation. That requires global inclusion and transparency of negotiations, suggesting that future tax reforms should take place under UN auspices. In the meantime, G20 members have the opportunity to improve upon the one-sided deal proposed by a group of rich countries, and set the basis for a better deal that can stick.

 



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