Social Justice Ireland pre-Budget proposals

Social Justice Ireland's pre-Budget proposals centre on tax reform and an end to expenditure cuts. They argue for a minimum effective corporate tax rate of 6 per cent, among other measures. More detail can be read here.

Tax transparency: a step change or climate change?

The OECD has another new report out today on tax transparency, this time to tie in to the G8 meeting in Enniskillen. Formally, this report was commissioned by the G8, though any impression given that the G8 are driving OECD activity in this area may be misplaced.

So what’s in this one? Well, an ambitious title for a start – “A Step Change in Tax Transparency” which is calculated to raise expectations and signal a serious commitment to change. The content focuses on reassuringly practical aspects of automatic exchange of tax information between jurisdictions. Anyone who has ever worked in a large organisation knows how difficult it can be to persuade computer systems or databases on one side of the building to talk to those on the other, so you can imagine the difficulties inherent in exchanging taxpayer information automatically between, say, the UK and Mozambique. This report seems to have been written by someone who has thought about the issues and is genuinely trying to work them out. The recommendations are practical, and focus on establishing relationships, getting the legal basis clear, defining the scope of information to be exchanged and lining up IT systems to receive the information.

Notably, the use of a common multilateral convention on information exchange is proposed as a practical solution. This has echoes of the idea floated by the OECD in April of a single multi-lateral tax treaty to replace all or part of the 3,000+ bilateral tax treaties currently in force around the world.  The latter is of course a far bigger proposition, and one which has serious potential to close off aggressive “treaty shopping” activities – the kind of artificial channelling of funds around the tax treaty network designed to avoid withholding taxes. It would be interesting if information exchange opened up the real possibility of this kind of close coordination.

There are obvious issues to be overcome, not least building the capacity of taxing authorities in less developed countries not only to gather and provide the information but to securely store and process it, and in setting the scope of information to be reported and defining what entities provide that information. Calling this one report a step-change may be gilding the lily, but taken with the OECD’s work on BEPS, recent UN guidance on transfer pricing for developing countries and more widespread developments on capacity development for taxing authorities in the Global South, this is certainly part of a shift in the climate around international tax avoidance.

Maybe not a step change just yet, but definite signs of climate change.

Sheila Killian

@islandtotheleft

AkiDwA Networking Event

AkiDwA invites you to BRAIN GAIN IRELAND - The annual networking meeting of migrant entrepreneurs and professionals.

Date: Friday 5 July 2013.
Venue: Gresham Hotel, O’Connell Street, Dublin 1
Time: 6pm – 11.00pm
Admission: Free

Established in 2009, Brain Gain Ireland is a network of entrepreneurs, professional and business people who have migrated to Ireland. The number of Irish residents who were born outside Ireland continues to increase and stood at 766,770 in 2011 an increase of 25 per cent on 2006, and accounting for 17 per cent of the population. During the Celtic Tiger period private business and the Irish Government travelled the world to interest professionals to relocate to meet the labour market demands in all areas.

With the recession, property crisis and unemployment at an all-time high today, we see the impact on both indigenous and migrants in Africa Centre Dublin Ireland

Objectives:
I. To share, explore and highlight the ‘gains’, contributions of migrant professionals and entrepreneurs in Ireland

II. To create a strong networking opportunity for migrant professionals and entrepreneurs in Ireland irrespective of their background

Refreshments will be provided.

To RSVP, contact Alex Wells. Details here: http://www.facebook.com/events/305544889540270/

International tax avoidance - an update

In advance of the G8, it might be useful to update what’s happening with the main international movers on the question of international tax avoidance. For a primer in this, see this earlier post.

The OECD at the end of last month formally reaffirmed their commitment to address tax base erosion and profit shifting (BEPS - of which more here). Again, their motivation is mainly economic, arising from the damage done to tax revenue and the integrity of the system by tax avoidance, and the impact this might have on growth and employment. This time they specifically mention the damage done to emerging and developing economies also, which marks a move by the OECD to be more inclusive on this process. The next BEPS report is now due in July, and this will set out a timeline for the full project. At this stage, it’s anticipated that concrete changes will be coming in perhaps two and a half years.  In the meantime, there is a commitment on the part of OECD ministers, including our own, to collaborate more; to work on transfer pricing rules with a specific focus on intangibles; to consider revising treaties to take account of digital goods and services and to address arbitrage. The idea of a multi-lateral tax treaty to replace the many bilateral treaties is still on the table. 

The OECD is not, of course, as inclusive a body as the UN, and in fact the UN has observer status at OECD meetings on tax. The UN itself is starting work on the taxation of mining, oil and gas companies, with a particular focus on how this impacts development in the global south. They have also officially launched their Practical Manual on Transfer Pricing for Developing Countries, and continue to work on capacity-building for taxing authorities in less-developed economies. They do serious work, and are also seriously under-funded.

The EU continue to work on their action plan published last December, the main recommendations of which include blacklisting non-compliant jurisdictions, and including a clause on double non-taxation in new treaties. They also work with the UN on supporting capacity-building for the Global South. The EU specifically note that aggressive tax avoidance contravenes the principles of corporate social responsibility, which is interesting in the context of recent comments by, for example, Apple’s Steve Wozniak on the ethics of tax avoidance. 

Meanwhile, David Cameron has summoned the leaders of Britain’s overseas territories, asking them to sign up to information-sharing. This is an effort to address so-called “secrecy havens” such as Jersey and the British Virgin Islands, which not only form a key part of the global tax avoidance chain, but are also potentially used in money-laundering more broadly. None of this addresses domestic UK tax rules. Cameron has said he aims to make tax transparency a key theme of the G8 summit. 

These are interesting times. Some very senior tax planners of global 

multinationals spoke to me last week of their reaction to the outrage about Apple’s tax affairs. They could see that very aggressive tax planning was becoming unacceptable, but having built successful careers in the practice, were mostly taken unawares at the force of change. As one put it: “Suddenly all this is supposed to be wrong?” The wind of regulation is shifting. Both multinational companies and countries which seek their international investment need to work hard to keep up. 

Sheila Killian

@islandtotheleft

TASC Launches Equality-Proofed Water Charging Proposals

Nat O'Connor: We just launched our proposals for a more equitable model of water charging. The equitable model would involve 'water credits' as a subsidy for low income and special needs households combined with increasing block tarrifs, so that those who use the most water, pay most.

Click here to read the proposals.

Press Release here.

Life Satisfaction and Wellbeing

Nat O'Connor: The Irish have reported a high level of "life satisfaction" in the OCED's latest Better Life Index. Yet, as pointed out by Richard Layte of the ESRI: “Ireland often does better on dimensions with more subjective assessment, as Irish people have an upward bias in their responses [and] so always profess higher satisfaction and well-being than other nations. Whether this reflects the reality is another issue.” (Irish Times 4th June 2013).

The OECD index is purposefully open for different interpretations. A viewer can choose to give different weights to health, education and other factors, in order see whether different priorities lead to different rankings among countries. Ireland ranks lower for income/wealth but higher for community and work-life balance. More detail on Ireland can be seen here.

As noted above, the Irish have a tendancy to report very high levels of subjective wellbeing, whatever the reality. These kinds of cultural differences can be measured to an extent. One clever technique, mentioned by Robert Anderson from Eurofound's Living Conditions and Quality of Life unit, is to ask people about the weather over the last month. This can be compared against the official records to give some sense of optimism/pessimism as a cultural trait. The Irish typically imagine there were several more days of sunshine than there really were, while some other European nations report less. (We clearly have to make the best of what little sunshine we get!)

This week (Thursday), the Whitaker Institute in NUI Galway (in collaboration with TASC) is hosting a conference on the topic of wellbeing and how it might be measured. As the CSO household survey and EU-SILC survey are both including measures of subjective wellbeing this year, it will be important to ensure that this data is interpretted in a way that enhances rather than masks other measures of quality of life and "quantity of life", including objective measurements like health inequalities and income disparities.