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BackEvery six months, the International Monetary Fund (IMF) publishes its fiscal policy report “Fiscal Monitor”. The most recent publication in October 2013 contains some interesting and sometimes amazing demands. All in all, the International Monetary Fund comprises wide-ranging tax reforms to consolidate budgets and to stimulate sustainable growth, putting particular emphasis on issues concerning fairer taxation at a global level. The IMF above all declares aggressive tax planning by multinational concerns and tax competition between states to be key problem areas.
Tax reforms against government debt
On 9 October 2013, the International Monetary Fund (IMF) published its bi-annual “Fiscal Monitor”, a report on national fiscal policy in comparison with other countries. The current paper is divided into two thematic blocks. The first topic to be addressed is government debt and how respective political efforts by nation states have to be rated. According to the IMF, the fiscal consolidation phase has not been completed yet and remains the most significant problem area of national economic policy. On the one hand, it is necessary to stay with the adopted austerity course.
On the other hand, wide-ranging tax reforms could pursue a new way towards budget consolidation. However, reform for the IMF does not just mean an increase of mass taxes such as Value Added Tax. On the contrary, the IMF focuses on those areas, which employee representations have been addressing for years.
Against aggressive tax planning and tax competition
First of all, the International Monetary Fund insists on taxing carbon emissions as a key measure against climate change. In the following it analyses the question of the fairness of national tax systems and reveals significant room for improvement. It condemns the systematic exploitation of tax loopholes by multinational concerns, whose tax avoidance practices deprive governments of important funds.
Even though these practices were formally legal, they would do enormous harm to the economy, a fact that the IMF underpins with a reference to the OECD studies on the so-called “Base Erosion and Profit Shifting“ (BEPS). The tax avoidances strategies of multinational concerns also mean that national tax systems find themselves in global stifling competition. The IMF wants to counter this “race to the bottom” with more international cooperation.
Apart from that, the IMF also criticises the existence of tax havens, which would also do tremendous economic harm. That is why it approves of introducing an automatic exchange of information, as it has been demanded by the OECD.
Tax reforms at national level
Furthermore, tax systems worldwide had been less and less progressively orientated. In simple terms: the tax burden was increasingly carried by the population at large, whereas the affluent part of society was gradually paying successively fewer taxes becoming increasingly richer. That is why the International Monetary Fund considers the increase of top tax rates in some countries useful. The IMF also argues that in many countries taxes, in particular the taxes on property, would be far too low; however, it would be exactly these levies, which could provide tangible growth impulses.
Promising messages?
In general, in the discussion concerning the tackling of government debt, the International Monetary Fund until now attracted attention with its demand for neoliberal structural reforms. Overall, the current “Fiscal Monitor” does not represent a departure from this Credo. Nevertheless, from the point of view of employee interests it has to be welcomed in principle that issues of fairer taxation are now increasingly discussed at a global level. However, based on previous experiences one has to be rather pessimistic whether these current debates will bring any substantial results.
After all, the G-20 has on several occasions declared war on tax fraud, tax evasion and tax avoidance. The only achievement so far has been a formal agreement concerning the introduction of an automatic exchange of information.
Further information:
IMF press release on the “Fiscal Monitor”
“Fiscal Monitor”, October 2013
On 9 October 2013, the International Monetary Fund (IMF) published its bi-annual “Fiscal Monitor”, a report on national fiscal policy in comparison with other countries. The current paper is divided into two thematic blocks. The first topic to be addressed is government debt and how respective political efforts by nation states have to be rated. According to the IMF, the fiscal consolidation phase has not been completed yet and remains the most significant problem area of national economic policy. On the one hand, it is necessary to stay with the adopted austerity course.
On the other hand, wide-ranging tax reforms could pursue a new way towards budget consolidation. However, reform for the IMF does not just mean an increase of mass taxes such as Value Added Tax. On the contrary, the IMF focuses on those areas, which employee representations have been addressing for years.
Against aggressive tax planning and tax competition
First of all, the International Monetary Fund insists on taxing carbon emissions as a key measure against climate change. In the following it analyses the question of the fairness of national tax systems and reveals significant room for improvement. It condemns the systematic exploitation of tax loopholes by multinational concerns, whose tax avoidance practices deprive governments of important funds.
Even though these practices were formally legal, they would do enormous harm to the economy, a fact that the IMF underpins with a reference to the OECD studies on the so-called “Base Erosion and Profit Shifting“ (BEPS). The tax avoidances strategies of multinational concerns also mean that national tax systems find themselves in global stifling competition. The IMF wants to counter this “race to the bottom” with more international cooperation.
Apart from that, the IMF also criticises the existence of tax havens, which would also do tremendous economic harm. That is why it approves of introducing an automatic exchange of information, as it has been demanded by the OECD.
Tax reforms at national level
Furthermore, tax systems worldwide had been less and less progressively orientated. In simple terms: the tax burden was increasingly carried by the population at large, whereas the affluent part of society was gradually paying successively fewer taxes becoming increasingly richer. That is why the International Monetary Fund considers the increase of top tax rates in some countries useful. The IMF also argues that in many countries taxes, in particular the taxes on property, would be far too low; however, it would be exactly these levies, which could provide tangible growth impulses.
Promising messages?
In general, in the discussion concerning the tackling of government debt, the International Monetary Fund until now attracted attention with its demand for neoliberal structural reforms. Overall, the current “Fiscal Monitor” does not represent a departure from this Credo. Nevertheless, from the point of view of employee interests it has to be welcomed in principle that issues of fairer taxation are now increasingly discussed at a global level. However, based on previous experiences one has to be rather pessimistic whether these current debates will bring any substantial results.
After all, the G-20 has on several occasions declared war on tax fraud, tax evasion and tax avoidance. The only achievement so far has been a formal agreement concerning the introduction of an automatic exchange of information.
Further information:
IMF press release on the “Fiscal Monitor”
“Fiscal Monitor”, October 2013