A panel of international experts discussed measures to improve the fiscal capacity of developing countries at a conference organised by the Organisation for Economic Co-operation and Development (OECD) on Thursday 16 February.
Chetan Rao, Director of the Income Tax Department in the Ministry of Finance of India, the country currently chairing the G20, believes that “it is essential to develop tax capacity and effectively implement the two pillars of the OECD agreement on the taxation of multinationals” (see EUROPE 13085/8).
He also said it was “imperative that the rules are simple and effective and that the global tax architecture is fair”.
According to Alexandra Haas, Executive Director of Oxfam Mexico, tax fairness requires better taxation. “The collection of taxes on wealth has not increased, while taxation on wages has”, she lamented. “The tax system is biased and taxes wages more than assets” she continued.
In addition, she noted that extreme wealth and extreme poverty have increased, especially with the energy crisis. “If we taxed better, we could recover $1.3 trillion a year”, she said. This money could then be used to support the poorest countries and to increase investment in public policies. “But this could only work through coordinated action”, Haas added.
“The first source of funding to be mobilised is domestic”, said Amélie de Montchalin, France’s Permanent Representative to the OECD. “Development aid has never been so high, the UN estimates that it should be multiplied by 25 to finance sustainable development, energy transition and future reconstruction in Ukraine” she said.
On average, in OECD countries, tax resources are equivalent to 34% of GDP, compared to 22% in South America and less than 15% in Africa. France is therefore committed to helping these countries work on tax collection through an adapted tax policy and a strengthening of tax administrations.
Sameera Khan, head of the Country Programmes Unit of the African Tax Administration Forum (ATAF), also works on this. “We are trying to enhance capacity in digitalisation and human resources by developing a common African perspective”, she explained.
Mr Rao highlighted the importance of one last point: fiscal morality. “This is the keystone of any tax administration”, he said. “Fiscal morality can only increase when citizens can see the effect of their taxes” commented Ms Khan. (Original version in French by Anne Damiani)