:00:04. > :00:14.could have supported life. Time to update you on all the
:00:14. > :00:20.
:00:20. > :00:27.financial news in World Business Report.
:00:27. > :00:35.Detroit files for encrypted, the fifth US state to go bust this year.
:00:35. > :00:40.But what will it mean for residents? Making the multinationals pay their
:00:40. > :00:50.wage. The 20 finance ministers take aim at corporate tax avoidance at
:00:50. > :00:51.
:00:51. > :00:55.their meeting in Moscow. -- G 20. Welcome to World Business Report.
:00:55. > :01:04.Also coming up in the programme, will Japanese voters give a thumbs
:01:04. > :01:13.up to add a non- mix when they go to the polls on Sunday? -- Shinzo Abe.
:01:13. > :01:17.But first, Detroit now has another unfortunate claim to fame. It has
:01:17. > :01:23.filed for the largest municipal bankruptcy in US history. Taking a
:01:23. > :01:27.look at the numbers. It owes 18.5 billion US dollars in long-term
:01:27. > :01:32.debt. If the bankruptcy is approved by a judge, it will enter
:01:32. > :01:42.negotiations with its thousands of creditors. Many will face major
:01:42. > :01:50.losses. What about the broader ramifications of this? US cities are
:01:50. > :01:53.$3.7 trillion is. That is the size of the municipal bond market. It
:01:53. > :02:00.seems as a safe place to invest, but this will send some ripples through
:02:00. > :02:09.it. There could be more of this on the way. For cities have filed for
:02:09. > :02:19.bankruptcy. -- format. Time to talk to a city reporter at Detroit free
:02:19. > :02:23.press. Tim Mac -- thank you for joining us. What does this mean for
:02:23. > :02:33.residents who rely on the city for their income, pensioners, healthcare
:02:33. > :02:33.
:02:33. > :02:38.workers, et cetera? It is up in the air right now. We
:02:38. > :02:47.assume that pensions will not go away, healthcare will not go away
:02:47. > :02:54.for an estimated 20,000 people. But there is significant talk about
:02:54. > :02:58.reducing the amount of benefit they get. There is talk of moving city
:02:58. > :03:06.workers from a city funded health-care plan to healthcare
:03:06. > :03:11.exchanges that are part of the President's affordable care act.
:03:11. > :03:15.There is a major showdown in the works between whether state
:03:15. > :03:23.constitutional protection in Michigan that has kept public
:03:23. > :03:28.pensions in the lockbox might go away. The real question is what
:03:28. > :03:35.happens when a city like Detroit has no money to pay the pensions promise
:03:35. > :03:41.to people years ago. Let us widen this out and talk about the wider
:03:41. > :03:47.ramifications for the country's municipal bond market. It is worth
:03:47. > :03:54.around $3.7 trillion. That is a huge sum. Traditionally it has been seen
:03:54. > :03:59.as a safe place to put money. What could be the effect of this? There
:03:59. > :04:07.are a number of people we have talked to about this. There is
:04:07. > :04:13.concern among some folks in the bond industry that emergency managers
:04:13. > :04:17.approach to bankruptcy has focused on separating secured creditors from
:04:17. > :04:21.unsecured creditors. The secured creditors would be those who have
:04:21. > :04:30.helped the city sell bonds of projects like water and sewage
:04:30. > :04:35.systems. Those that generate revenue for the customers of Detroit who
:04:35. > :04:45.paid monthly fees for their water service. Part of those fees are used
:04:45. > :04:51.
:04:52. > :04:56.to pay down the bond that. -- debts. And now those who do not have the
:04:56. > :05:00.link to specific revenue streams are unsecured. That could be several
:05:00. > :05:07.billion dollars of debt. He is proposing treating them in a
:05:07. > :05:10.different league than they would any other creditor. -- differently.
:05:10. > :05:15.Bonds have usually be considered one of the safest forms of investment.
:05:15. > :05:22.They do not provide the highest returns, but you would never worry
:05:23. > :05:28.about losing money. There is the potential for a pension funds,
:05:28. > :05:38.private investors, people who own accounts that invest in the bond
:05:38. > :05:41.
:05:41. > :05:47.markets to take a hit. There are so much we could talk about. But we
:05:47. > :05:51.have to live it there. Thank you for that update on how things stand the
:05:51. > :05:59.people in the city of Detroit. Finance ministers from the G 20
:05:59. > :06:03.economies are meeting in Moscow. Top of the agenda is how to tackle tax
:06:03. > :06:11.avoidance by multinational corporations. They shift their
:06:11. > :06:18.profits to tax havens like to tax havens like a renewed or Ireland. --
:06:18. > :06:22.tax havens like renewed or Ireland. This is following news of grumbling
:06:22. > :06:27.by which owners and small businesses that the richest corporations are
:06:27. > :06:37.not paying their fair share. Apple has been held up a criticism. It
:06:37. > :06:44.filed with the West regulators that it made every $37 billion in profit.
:06:44. > :06:54.On that they just over $700 million in tax. That translates to a rate of
:06:54. > :07:00.
:07:00. > :07:08.1.9%. To put that into context, the UK's corporation tax rate is 24%.
:07:08. > :07:14.I think we are going to try and bring you that report if we can.
:07:14. > :07:19.Entrepreneurs feel mistreated. They design and install luxury bathrooms.
:07:19. > :07:23.Not an easy business to grow in France. They pay one third of their
:07:23. > :07:28.profits in tax. But according to figures given to the National
:07:29. > :07:36.Senate, multinational corporations like Amazon and Apple pay less than
:07:36. > :07:40.1% on the money they make in France. Not fair play, says this company.
:07:40. > :07:46.TRANSLATION: We use local production in our businesses. We take on
:07:46. > :07:52.materials in France to help people living here. These companies and
:07:52. > :07:59.they pay little in tax compared to what they generate in profit.
:07:59. > :08:06.OECD, a think tank for developed economies, has developed an action
:08:06. > :08:09.plan to close tax loopholes and stop the use of tax havens. If a company
:08:09. > :08:13.locates its profit in a jurisdiction where nothing is happening, it will
:08:14. > :08:20.not work. What we are trying to put in place are rules that will
:08:20. > :08:24.neutralise this. But there are suggestions that behind the United
:08:24. > :08:28.front shown by world leaders on corporate tax paying, delegates
:08:28. > :08:36.working with the action plan have been jostled to promote national
:08:36. > :08:42.interests. Germany was given the lead in drafting new laws to make
:08:42. > :08:46.Internet firms like Facebook, Google, pay more tax in the
:08:46. > :08:48.countries they do business. But the bulk of these firms are American. It
:08:48. > :08:55.is understood that Washington has been lobbying to have the new
:08:55. > :09:00.measures watered down. It will take two more years of negotiation before
:09:00. > :09:09.the OECD can produce a fully fledged international tax code. But it says
:09:09. > :09:13.the golden age of corporate tax avoidance is now reaching an end.
:09:13. > :09:17.To Japan now, where voters go to the polls on Sunday to elect the upper
:09:17. > :09:24.house of Parliament. Shinzo Abe and his ruling party are ahead in
:09:24. > :09:28.opinion polls. That could see them regaining control of both houses of
:09:28. > :09:36.Parliament for the first time in six years. The economy is seen as a top
:09:36. > :09:42.reality. -- priority. That is all thanks to the policies that are
:09:42. > :09:50.pumping sums of money into the economy. For more on what we can
:09:50. > :09:53.expect, we will speak to a director at a financial group. As we were
:09:53. > :10:03.saying, widely expected to see them switched to victory. But by how
:10:03. > :10:04.
:10:04. > :10:12.much? As you say, he is very popular. He has a strong majority.
:10:12. > :10:21.But also, because his opposition shot themselves in the foot. That is
:10:21. > :10:28.one of the reasons he will have a total convincing victory. A sweeping
:10:28. > :10:36.victory by Shinzo Abe. Let us talk about the sales tax that there will
:10:36. > :10:43.have to be making a decision on shortly. Is that very likely?
:10:43. > :10:47.most likely to go ahead. That is one of the answers the Japanese
:10:47. > :10:52.government would have to the rest of the world in coping with increasing
:10:52. > :11:01.debt problems. This is going to be very unpopular. He has to have a
:11:01. > :11:10.look at the timing. He would still have the momentum of this
:11:10. > :11:15.positivity. It will flow on to Japanese exporters. As will as a
:11:15. > :11:22.continuation of the monetary policy. We are also expecting to see some
:11:22. > :11:29.hard structural reforms. Absolutely. He has been able to come up with
:11:29. > :11:35.painful policy. He is going to have to come up with the implementation