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Policy issues concerning Taxation

Leaders of the world’s largest economies have backed what they call “an ambitious and comprehensive” plan to crack down on multinationals that shift profits into low tax countries.

The G20 countries also increased the pressure on tax evasion with plans to exchange tax information automatically between themselves by the end of 2015.  They went on to call on all other jurisdictions to join them by the earliest possible date. 

Global solutions are needed to ensure that tax systems do not unduly favour multinational enterprises, leaving citizens and small businesses with bigger tax bills, according to the Organisation for Economic Cooperation and Development (OECD).

The European Commission has proposed an action plan to tackle the issues of corporate tax evasion and fraud in the EU. Such evasion and fraud by major companies are believed to cost European governments up to €1trillion a year.

The action plan sets out 30 new measures to close loopholes and increase information exchange. The European Commission has also called on EU-member countries to implement the current EU code of conduct on business taxation as soon as possible.

Background

The average tax and social security/insrance burden on employment incomes increased in 26 out of 34 OECD countries in 2011 according to the new OECD Taxing Wages publication.

Proposals in the 2012 Finance Bill to provide tax incentives aimed at luring senior multinational executives to Ireland mark a return to the worst practices of manipulating the tax system to benefit the better off while increasing costs and cutting services for the country’s poorest

Social Justice Ireland strongly welcomes the progress made towards introducing a Financial Transaction Tax in the EU.  This would be a very efficient mechanism to ensure banks and financial institutions made a contribution towards resolving the current series of crises which were, in great part, caused by these very institutions.  It is time financial institutions paid their fair share. 

Some multinational corporations are diverting profits made in developing countries to Ireland to avail of the low corporation tax rate here. By so doing they are robbing the countries in which they made their money of billions of euros in tax revenue.

The German finance minister, Wolfgang Schäuble, has included a tax on financial transactions as part of his budget plan covering the period 2012-2015. This is a very welcome development. Social Justice Ireland has constantly argued for the introduction of a tax on financial transactions along the lines of the proposal originally presented by Nobel Economics Prize winner James Tobin and known since then as the Tobin Tax.

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