The economic ills of the crisis have rightly prompted public reevaluation of government spending habits and revenue collection on both sides of the Atlantic. While congressional super committees and EU delegations hash out plans to foot massive debt bills, a combination of civil society groups, the Occupy movement, and simple common sense have brought long-deserved attention to certain tax loopholes and corporate practices that cost governments billions of dollars.
Since 2008, unemployment in the OECD area has leapt from 6.1% to 8.2% in 2011. Governments searching for ways to increase employment must at the same time deal with the large budget deficits that are also a legacy of the crisis. Tax reform can play a role in this balancing act.
Social media is being exploited by advertisers, politicians and headhunters. Government tax offices are also weighing in.
Have you ever followed a tax official on Twitter, or “liked” your tax office’s Facebook page? From the US to New Zealand, tax authorities are raising their social media profiles by providing advice on filling out tax forms, sharing information on budget changes, promoting e-tax forms and, of course, with reminders of payment deadlines.
When the OECD joined the G20 crackdown on tax havens during the economic crisis in 2009, its longstanding work helped to curb this harmful tax practice and implement a global standard of bank transparency. Now the organisation is focusing on another time-honoured malpractice: that of slipping taxable income through fiscal loopholes. Some call this creative accounting, the OECD calls it aggressive tax planning, and because it is hurting government revenue, it is hurting entire economies as well.
Like the OECD, VAT has also been around for about 50 years. Is it time to reform some of the older, more unwieldy versions and go for a trimmer, broad-base, standard-rate VAT system instead?
Building tax administration capacity is needed to help spur development in Africa. A new survey shows that action is being taken, but more work is needed.
The recent financial crisis has left a hole in the public finances of many countries. Yet, with the right preparation, governments may have been better placed to fund that gap. This holds lessons for future crisis resolution strategies.
Defying fiscal deficits
One area where governments have been looking to raise revenues is green taxes. And with good reason. Taxes can provide a clear incentive to reduce environmental damage. But while the number of environmentally-related taxes has actually been increasing in recent years, revenues from these taxes have been on a slight downward trend in relation to GDP. The decline in revenue partly reflects the drop in demand for fuel in response to recent high oil prices and other factors, which in turn has led to a reduction in total revenues from taxes on energy products.
When the G20 decided to get tough on tax evasion, several decades of OECD work suddenly became even more relevant than before. The growing determination to tackle evasion is helping to restore trust in tax systems and close off avenues for illegal activities.
The tax system can be a powerful policy instrument for spurring innovation. Here is how.
Can taxation help governments achieve environmental goals with respect to energy use and emissions? Yes, with conditions.
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