Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Friday, April 20, 2018 05:00:21 PM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Greater cooperation to strengthen taxation

By
09th-Oct-2017       
Comments
Share your thought
Post a comment »
Read all () »

Jomo Kwame Sundaram :
Since the 1950s, there has been a popular dance called the 'limbo rock', with the winner leaning back as much as possible to get under the bar. Many of today's financial centres are involved in a similar game to attract customers by offering low tax rates and banking secrecy.
This has, in turn, forced many governments to lower direct taxes not only on income, but also on wealth. From the early 1980s, this was dignified by US President Ronald Reagan's embrace of Professor Arthur Laffer's curve which claimed higher savings, investments and growth with less taxes.
Following a long hiatus, Laffer is now making a comeback with the recent election of Donald Trump who has espoused a similar claim that lower taxes will lead to higher growth, lifting all American boats. It remains to be seen how President Trump will reconcile this with his promise to build and improve infrastructure in the US, which many hope will finally create the basis for the long awaited recovery following the 2008 financial crisis and the ensuing Great Recession.
With the decline of government revenue from direct taxes, especially income tax, following Laffer's advice, many governments were forced to cut spending, often by reducing public services, raising user-fees and privatizing state-owned enterprises. Beyond a point, there seemed to be little room left for further cuts, while governments had to raise revenue to fund its functions.
This increasingly came from indirect taxes, especially on consumption, as trade taxes declined with trade liberalization. Many countries have since adopted value added taxation (VAT), touted in recent decades by the International Monetary Fund (IMF) and others as the superior form of taxation: after all, once the VAT system is functioning, raising rates is relatively easy.
Instead, a progressive tax system would seek to ensure that those with more ability to do so, would pay proportionately more tax than those with less ability to do so. Instead, tax systems have become increasingly regressive, with the growing middle class bearing the main tax burden.
Meanwhile, tax competition among developing countries has not only reduced tax revenue, but also made direct taxation less progressive, while the growth of VAT has made the overall impact of taxation more regressive as the rich pay proportionately less tax with all the loopholes available to them, both nationally and abroad. Although there are many reasons for income inequality, untaxed assets have undoubtedly also increased both wealth and income inequalities at both national and international levels.
Following the Panama revelations, most Western government leaders have pledged tough action against tax evasion and avoidance, especially by those using developing country tax havens. In the face of continued failure to deliver on the almost half-century old United Nations commitment to provide aid to developing countries equivalent to 0.7 per cent of their national incomes, then OECD Development Assistance Committee (DAC) chair, Erik Solheim, proposed greater tax cooperation instead.
After all, many developing countries are not devoid of financial assets, but so much has been taken out and hidden by wealthy elites in private financial institutions, especially in 'offshore' tax havens.
But since most using tax havens seek assets in OECD countries, the Paris-based organization has historically focused efforts on very limited matters of concern to their members. Hence, they have blocked efforts to give the UN a stronger mandate to advance international cooperation on taxation, culminating in the modest Addis Ababa Action Agenda declared at the third UN Financing for Development conference in July 2015.
As major users of such facilities themselves, many developing country elites have been conspicuously silent in the face of the Panama revelations of what they have long enabled and practiced. After all, much of what is involved is publicly considered illicit, immoral, and even 'sinful', even if not illegal. As Warren Buffett and the group of 'patriotic millionaires' in the US have noted, the rich currently pay less in tax than most of their lowest paid employees.
Many tax avoidance schemes are not illegal. But just because it is not illegal does not mean it is not a form of abuse, fraud or corruption. To tackle the corruption at the heart of the global financial system, tax havens need to be shut down, not reformed. 'On-shoring' such funds, without prohibiting legitimate investments abroad, will ensure that future investment income will be subject to tax as in the US and Canada.
If not compromised by influential interests benefiting from such flows, responsible governments should seek to enact policies to:
· Detect and deter cross-border tax evasion;
· Improve transparency of transnational corporations;
· Curtail trade mis-invoicing;
· Strengthen anti-money laundering laws and enforcement; and
· Eliminate anonymous shell companies.
(Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007).

Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Lawlessness in the transport sector


RAJIB Hossain, a third-year student of Titumir College, whom right hand was pulled out being stuck between two speeding buses in the city, drifted off to death on Tuesday after two weeks in coma. The life of the ill-fated youth ended quite tragically at 21 leaving his two teenage brothers ...

Football »

Real Madrid's Cristiano Ronaldo gestures during a Spanish La Liga soccer match between Real Madrid and Athletic Bilbao at the Santiago Bernabeu stadium in Madrid on Wednesday.


Entertainment »

Sudden rendezvous of Afsana Mimi, Zahid Hasan


Entertainment Report :Hothat Dekha (sudden rendezvous) is not a title. It was a sudden rendezvous of two friends, two popular actors and directors - Afsana Mimi and Zahid Hasan.  Recently they were taking part in shooting of two separate plays in the city’s Uttara area. Zahid Hasan was engaged with ...

Entertainment »

Momo appears as Alta today


Sheikh Arif Bulbon :National Film Award winner actress Zakia Bari Momo acted and Arun Chowdhury directed movie Altabanu releases today. In this movie, Momo acted in role of Alta against Anisur Rahman Milon. Farzana Rikta acted in role of Alta’s younger sister Banu. Including Dhaka this movie is set to ...

City »

Chief Election Commissioner KM Nurul Huda speaking at a seminar on 'Giving National Identity Cards among Expatriate Bangladeshis and Voting Rights' organised by Bangladesh Election Commission at Sonargaon Hotel in the city on Thursday.


International »

UN in talks with Syria, Russia on security for chemical weapons experts


AFP, United Nations :A UN team is discussing security arrangements with Syrian and Russian authorities in Douma to allow experts to deploy soon to investigate an alleged chemical weapons attack, UN security officials said Wednesday.The fact-finding mission from the Organisation for the Prohibition of Chemical Weapons (OPCW) to the Syrian ...

Editorial »

Ensure proper working atmosphere in RMG sector


WORKERS at more than 3,000 subcontracting readymade garment factories in Bangladesh have been working under dangerous conditions even five years after Rana Plaza collapse as the factories still lack of safety measures, according to a recent study of New York University. The study titled 'Five Years After Rana Plaza: The ...

Football »

Draw ceremony of SAFF Championship held


Sports Reporter :The draw ceremony of SAFF Championship was held at the Pan Pacific Sonargaon Hotel in the city on Wednesday.President of BFF and President of SAFF Kazi Md Salahuddin, Regional Country Manager of Maruti Suzuki Seije Hamda, Senior Vice-President of BFF Abdus Salam Murshedy, Vice-President of BFF Kazi Nabil ...

Sports »

The Thailand-bound Bangladesh Hockey team pose for photo at the Falcon Hall of Bangladesh Air Force Office in the city's Tejgaon on Wednesday.


Entertainment »

Is Natasha Suri Lady Luck for Dwayne Bravo?


A few days ago Natasha Suri and Dwayne Bravo were spotted laughing and chatting away animatedly, in spite of the attention of on-lookers and fans at a SoBo coffee shop. She was also spotted in the VIP box watching the IPL match the next evening at Wankhede Stadium in Mumbai. ...

Entertainment »

Gauahar Khan’s Gauahargeous loved by all


Gauahar Khan, appreciated for her performances in Begum Jaan, Ishqzaade and countless other blockbusters turned into an entrepreneur on 15th March. Known to the fact that her fashion sense is loved by the masses both on and off screen, she launched her clothing called Gauahargeous. To ensure that quality tops ...

City »

BNP Standing Committee Member Amir Khasru Mahmud Chowdhury speaking at a protest rally organised by 'Arafat Rahman Koko Smrity Sangsad' at the Jatiya Press Club on Wednesday demanding release of BNP Chairperson Begum Khaleda Zia and other leaders of the party.


International »

US in `extremely high` level talks with North Korea on summit: Trump


Reuters  Beach, Fla :President Donald Trump said on Tuesday the United States is engaged in direct talks at "extremely high levels" with North Korea to try to set up a summit between him and its leader, Kim Jong Un.Trump made the comment as he and Japanese Prime Minister Shinzo Abe ...

Editorial »

Extra judicial killing has to be stopped no matter who do it


THE country has witnessed at least one extra-judicial killing, reported as alleged incidents of 'gunfight' and 'crossfire', in every two days since the beginning of 2018. That means, the gross violation of human rights by law enforcement agencies with impunity continues unabated. Rights activists are worried while allegations have been ...

Cricket »

South Zone suffer batting collapse


Prime Bank South Zone suffered batting collapse as they were dismissed for 191 against Walton Central Zone on the first day of the fifth round of four-day Bangladesh Cricket League held on Tuesday at Shaheed Kamruzzaman Stadium in Rajshahi.Central bowlers not only shine with the leather but their batsmen too ...

 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news