Our contributors have come from different backgrounds: tax authorities, academics, business, NGOs and development agencies. But there are a number of common themes emerging.
First, as Michael Hastings points out, we face a daunting task: it is estimated that an extra $214 billion per year of revenue is needed in low-income countries alone to meet the SDGs. Increasing the tax take in developing countries is a challenge.
Part of the challenge is the global tax system itself. The rules have not kept pace with modern developments. Globalisation and new business models make it harder for countries to collect corporation tax and, as Pascal Saint-Amans points out, have facilitated tax planning by MNEs.
Part of the problem relates more specifically to the Global South. Mary Baine notes the need to develop the capacity of tax administrations which often struggle with ever increasing complexity in international tax. Corruption and tax evasion are significant problems and, as Thabo Legwaili says, undermine tax morale and voluntary compliance. The size of the informal economy also makes expanding the scope of business taxation difficult.
One solution that is often proposed is to ensure that MNEs pay ‘their fair share’ of tax. Both Christine Allen and Ewan Livingstone note the problem of tax avoidance by MNEs and the rich in developing countries; and while there is some dispute about the amounts, the sums are definitely large. Nevertheless, both agree that there are complexities in the tax system and as Maya Forstater notes, the extra potential revenues are not sufficiently large to solve all the development needs.
Another possible solution is to widen the tax base (impose new taxes and bring in new taxpayers) and to deepen it (request more from existing taxpayers). But Thabo Legwaili explains how neither are that easy when the number and types of tax have already increased significantly in many countries and many taxpayers feel they are already overtaxed.
Nevertheless, progress is being made. Pascal Saint-Amans notes how the OECD BEPS initiative can assist developing countries, along with specific initiatives through, for example, the Platform for Collaboration on Tax and the Inclusive Forum. Mary Baine refers the successes ATAF has had in helping countries improve collection.
But what can more be done?
Alan McClean agrees with Ewan Livingston and Christine Allen that corporates can do more on transparency: an interesting meeting of minds between the corporate and NGO sectors. Providing sufficient information with clear explanations on tax payments on a country-by-country basis will inform the debate about tax policy and help shine a spotlight on what is and what is not acceptable planning. More work can be done on improving tax systems, for example to eliminate harmful tax incentives. It is even possible to revisit the established wisdom about residence and source taxation.
It is clear that in order to have a real dialogue transparency is required, but, as Maya Forstater notes, so are correct facts. Exaggerated claims will lead to bad policy. However, facts are not the only thing. As Christine Allen says: “Fact-based debates will only lead to change when they take place in the context of trust. People need to trust those that present the facts, and trust others to use those facts to enact change.”
So how to rebuild trust? How to deepen trusted relationships between various actors?
Trust is an outcome, not a message. We will only create it by acting in a trustworthy way. Attiya Waris links tax to human rights. For some that may be controversial; but the key step is to accept that tax – although a matter of law – has an ethical or moral dimension. And that applies to the way policy is made and laws are drafted, the way tax authorities enforce it, the way professionals give advice and to the choices taxpayers make. It also applies to the way the media reports on tax and to campaigns which NGOs run. This is why Responsible Tax thinking is essential for all stakeholders.
Collaboration is a word which comes up in several of the contributions. For effective collaboration, first all parties need to act with integrity and then to be seen to do so – to be transparent. This builds trust which means it is easier to understand the perspective of others, look at all the factors in play and search for common solutions. There will be no silver bullet or blueprint for a perfect tax system. Each country needs to develop its own policies and mix of taxes based on its particular circumstances. But with cooperation between all parties, at a national and international level, progress can be made towards creating sustainable tax regimes to ensure the sustainable development goals become a reality, not just an aspiration.
Jane McCormick, Global Head of Tax, and Chris Morgan, Global Head of Tax Policy, KPMG International.