To coincide with the G20 Finance Ministers’ meeting in Rio de Janeiro, Brazil, from Wednesday 24 to Friday 26 July, the Organisation for Economic Co-operation and Development (OECD) published four reports on tax transparency and the link between taxation and inequality on Thursday 25 July. In this respect, it has noted a renewed interest in tax policy options aimed at combating inequality, in particular by taxing High Net Worth Individuals (HNWI) (see EUROPE 13451/23).
The OECD confirms data pointing to persistent income inequality and the rising concentration of wealth at the highest end of the distribution. While some countries, in particular middle-income countries, have seen declines in income and wealth concentration at the top, inequality persists in many countries, and the share of wealth held by the top 0.001% globally has been rising.
There is therefore significant scope to improve the progressivity of tax systems, such as by amending tax schedules, broadening tax bases, and achieving greater neutrality between the taxation of different types of income and assets. However, any reform requires careful consideration of potential policy trade-offs and impacts on economic growth.
More transparency
A more in-depth analysis would make it possible to examine how reforms aimed at strengthening progressivity and inclusive growth should be tailored to countries’ specific challenges and objectives. Further analysis could look at how structural pressures - for example, ageing, the informal economy, automation, the rise of artificial intelligence, market power or climate change - might affect different tax systems and their ability to support equity and inclusive growth. The focus on tax and inequality has also increased attention to the taxation of HNWIs, especially given evidence of the comparatively low effective tax burdens they face.
For its part, the NGO Oxfam has calculated that the richest 1% have accumulated more than $40 trillion in new wealth over the last decade, almost 34 times more than the poorest 50% of the world’s population. “Momentum to increase taxes on the super-rich is undeniable (and this week) is the real litmus test for G20 governments”, said Max Lawson, head of inequality policy at Oxfam, in a statement on Thursday 25 July.
According to the OECD, in identifying opportunities for international cooperation, it will be important to build on areas where it has already proven its worth, such as cooperation on transparency. In the other three reports, the OECD looked in particular at the transparency of beneficial owners and tax transparency, in the real estate sector, and in the world of crypto-assets.
To read the ‘Taxation and Inequality’ report: https://aeur.eu/f/d4q
To read the ‘Beneficial Ownership and Tax Transparency’ report: https://aeur.eu/f/d4s
To read the report ‘Bringing Tax Transparency to Crypto-Assets’: https://aeur.eu/f/d4u
To read the report ‘Strengthening International Tax Transparency on Real Estate’: https://aeur.eu/f/d4w (Original version in French by Anne Damiani)