It Doesn’t Need To Be A Zero Sum Game: New Settlements Required
We live in extraordinary times. A health pandemic has exposed a number of fault lines in society that many will say existed and needed to be exposed, including: an inequality of wealth and opportunity; the resilience of our institutions; the intergenerational transfer of wealth (in particular will our children enjoy an increased standard of living or are we burdening that generation with a massive financial obligation?).
At the same time, we are seeing an inclination for more interventionist government policy, while the inexorable need to respond to climate change continues to grow. Business has recognised the changing environment with the publication of common stakeholder metrics that acknowledge that “long term value is most effectively created by serving the interests of all stakeholders”.
“Tax has always been a cornerstone of the social contract. In 1927 it was said to be “the price we pay for a civilised society”. In 2021 it is immeasurably more complex.”
Tax has always been a cornerstone of the social contract. In 1927 it was said to be “the price we pay for a civilised society”. In 2021 it is immeasurably more complex. How do the policy settings aid a fragile recovery while ensuring we do not burden future generations? How does it start to deal with issues of inequality? How do we incentivise business to invest and create jobs? Now it is more important than ever that we get the nature of that complex social contract right. Tax policy is meant to be the instrument to achieve all these things while at the same time engendering trust from the public that business is paying its right and fair share.
But right for who, how, when and where? And critically and increasingly, how do we move beyond a zero-sum game of tax winners versus tax losers and establish a win-win new settlement for business, society and the planet? How do we encourage the right kind of investment and growth to provide jobs and opportunities both now and in the future? How do we have a debate on how the policy serves all of us?
The Global Responsible Tax project has been examining these deep and complex questions since 2014. Engaged organisations include the OECD, the United Nations, the IMF, World Bank, World Economic Forum and the B-Team, which in early 2018 released its own Responsible Tax principles. They are joined by global corporations, academics, think tanks, NGOs, campaigners and activists. In the UK, the pilot market for the KPMG program, there is now an All-Party Parliamentary Group (APPG) on Responsible Tax. This growing and diverse global community has met in every corner of the globe and co-authored several reports including Responsible Tax & the Developing World and What to Tax?
But since the COVID pandemic, we have deepened and quickened the pace of discussion and debate to help fashion a new and relevant direction of travel for global tax policy.
Since May last year, eleven roundtables have been held bringing together a wide range of stakeholders from across the globe. The first three looked at the overlapping timescales of thinking and action in this new COVID world: Reaction & Resilience; Recovery; and the New Reality.
After, came eight deeper dive sessions looking at specific regions and taxes as they relate to i) economic stimulus; ii) driving the green recovery; and iii) increasing revenues in general. You can catch-up with the write-ups from all of the discussions here.
You can catch-up with the write-ups from all of the discussions here
The emphasis of the project has always been not just on the what but the how of responsible tax. Clear policy outcome recommendations are essential – but the complexity of the issues and the different demands and perspectives of equally valid stakeholders including governments, international bodies, corporations, advisors and civil society bodies demand a consensus emerges. A tax future that is negotiated, not imposed.
This in turn requires a deep and prolonged investment of time and space to build trusted relationships in which listening and expressions of vulnerability – the confidence to say I don’t know or I’m not sure – is vital to the formation of thinking and recommendations that meet the complexity and scale of the tax agenda in the context of the economic, social and environmental challenges we now face.
The summary reports of the detailed work over the Summer and Autumn of 2020 reflect the deep foundations of the project and the mutual recognition that modern corporate success achieves positive social welfare; that fiscal consolidation is needed, but the pace and scale are up for discussion and that necessary tax changes do not necessitate a return to austerity. There is a maturity, openness, urgency and ambition to the discussion that the moment demands.
The Global Responsible Tax Project is now going through its own phase of reinvention and renewal – through COVID and, hopefully, out the other side, in necessarily a different and even more considered shape.
If anyone doubted that we needed a Global Responsible Tax Project in 2014, 2020 banished any doubts. 2021 must be the year to accelerate and deepen new thinking that leads to new policy.
So, the project will now step up a gear, carrying on the “recovery, how?” conversation but looking in particular at issues of transparency and green investment. A fresh series of seminars and thought leadership pieces, reflecting the diversity of stakeholders and needs of our interconnected and much more interdependent planet are currently being put in place. We hope you will join us on the journey.
Global Head of Tax & Legal Services, KPMG
Jericho Chambers has been convening and curating the Global Responsible Tax project in partnership with KPMG since 2014.