The Global Responsible Tax Project Newsletter – September 2019
Over the past few months, we have been continuing our deep dive into what Responsible Tax looks like in the 21st century – exploring the future of corporate taxation in an era of digitization and the role of trust in tax. Many among the Responsible Tax community have joined us for discussions and contributed thoughts and blogs and we are, as ever, extremely grateful for your support.
We wanted to share some of the fresh and thought-provoking ideas and content emerging from our 1100+ strong community of politicians & policy-makers; business leaders; campaigners & NGOs; tax experts and academics; media and commentators.
Corporate taxation in an era of digitization
New and significant pressures are building that will most likely force change on the global tax system. Many issues are in the spotlight: growing inequality within and between countries; the shift of income away from labour towards, capital which has occurred over the last 50 years; aging populations; how best to tackle climate change; more generally, how to finance the UN Sustainable Development Goals (SDGs).
As set out by Chris Morgan and Robert Phillips, in a recent Opinion piece, Corporation tax in particular has been in the eye of the tax storm, as globalization and digitalization create new issues about what, how and where to tax businesses. Do we know what are we trying to put right and what “good” will look like? Or do different stakeholders have divergent agendas so there will be dissatisfaction whatever the outcome?
Dr Charles Enoch, formerly Deputy Director at the International Monetary Fund and currently European Studies Centre Visiting Fellow, St Antony’s College, Oxford shared his response to the provocation. He writes, “The Responsible Tax project is hugely important, and highly commendable. In an age of total footlooseness, increasing international interconnectivity, stressed social welfare systems, and growing domestic and international inequalities, the work being carried out under this project is critical. The recognition that tax and social welfare are essentially twin sides of the same coin, and that the developing world should not just suffer the collateral effects of decisions taken by a small group of rich countries is central…” Click here to read the full blog.
Paul Gisby, Senior Manager at Accountancy Europe explains how demographic trends towards an older population, primarily in developed economies but also an increasing issue in emerging economies, are putting a strain on government budgets due to the reduction in the tax base and increasing need for the provision of social benefits. The profession has to take seriously its responsibility for ensuring that tax systems function properly for taxpayer and tax authority alike. Paul’s piece explores the need for evidence-based policy. Click here to read the full blog.
A July roundtable in Brussels brought 14 tax experts together to further examine this topic: understanding the different concerns stakeholders have with the current international corporate tax accord; key principles; how to update the system; consumption taxes; and the effect on developing countries were some of the key issues raised. You can read a write-up of the discussion here.
Stella Raventós-Calvo, Chair of The Fiscal Committee has also written a piece outlining her thoughts on the subject and the global principles that should guide this debate: Simplicity, administrability and fairness are among other vital aspects, including taking a long-term view; the impact of OECD proposals beyond the digital economy and the avoidance of “tax wars”. You can read Stella’s full article here.
European Think Tank Counterpoint, shared its recent report, The European Way of Digital: How to Make Tech Work for Open societies in Europe. Co-authored by Catherine Fieschi the publication looks at the digital transformation through the lens of the European experience. You can read the full report here.
The Role of Trust in Tax
As Stella Raventós-Calvo summarizes in her piece, “we need to restore trust in the institutions again and work on building capacity where this is non-existing or insufficient.” This sentiment is echoed by Jane McCormick and Robert Phillips in their Opinion Piece entitled Talk Tax, not Trust. “Responsible Tax thinking and principles enable an important re-set of the social compact, that will, in turn, go some way to addressing the vexed issue of trust and indeed leadership.”
Bringing together a wide-range of expert voices from across tax, academia, media, policy-making and business, members of the Responsible Tax community met in Dublin in May to ask what is a fair share in terms of tax? You can read the full write-up of the discussion here.
Dame Margaret Hodge MP, Chair of the UK All Party Parliamentary Group on Responsible Tax was unable to join the Dublin meeting but shared her thoughts online. She argues that “trust must be earned – and that involves serious self-scrutiny. Institutions and organisations should not ask themselves what would make them look more trustworthy; they should be asking themselves ‘what can we do to improve real-world outcomes that are driving these trust problems?’” To read here full article click here.
We are now working to pull together the numerous strands of these research areas into a major Think Piece which we aim to publish in early 2020. We will be soliciting and sharing further ideas and feedback in the coming months. If you would like to be involved please contact:
Meanwhile, please join the conversation at www.responsibletax.kpmg.com.