Events
Winning the Tax Wars: Global Solutions for Developing Countries
May 23-24, 2016Preston Auditorium, World Bank Headquarters, 1818 H Street NW, Washington, DC


Tax base erosion, driven by tax avoidance and tax evasion by multi-national firms and wealthy individuals, afflicts many countries, as the Panama Papers highlighted recently. These dynamics are damaging for developing countries, as they undermine their state capacity building and can lead to tax increases for the poor. This conference will address these issues and identify areas for more analytical work.

In recent years, issues around tax base erosion, in connection with globalization and the aggressive tax planning by multi-national firms, have attracted international attention and media coverage. More recently, the Panama papers have revealed a clear connection between tax avoidance, tax evasion and, more generally, illicit financial flows. These dynamics undermine developing countries’ efforts to build state capacity and enforce a legitimate contract with taxpayers.

The global tax agenda has mainly focused on these issues from the fiscal revenue generation perspective (tax base erosion and tax rate “race to the bottom”) and efficiency viewpoint (uncertainty of tax regimes for foreign direct investment and long term profitability of firms). Less attention has been given to how these tax trends are affecting developing countries and who the winners/losers are at the global level.

The objective of this one-and-a-half day conference is to discuss the issues around global “tax wars” affecting developing countries, draw on related areas in global taxation and shed light on topics that need more analytical work. It will feature lead experts from a variety of backgrounds and experiences, and include discussions of how improved design and enforcement of tax policy, as well as better tax cooperation, can help protect developing countries from negative consequences of these trends. The conference will also explore global solutions to global tax cooperation challenges.

As governments in developing countries – which are often the host and not the home of multi-national firms – see corporate income tax revenue foregone, they try to raise other taxes on the rest of the economy, including on lower income segments of the population. However, they often face structural challenges due to their own socio-economic and institutional constraints, aggravated by the perception that the richest individuals and large companies are not complying with their tax obligations, which further weakens their credibility.

In addition to facing corporate income tax avoidance and evasion, governments in developing countries also have pressure to reduce the scope and rates of taxes on personal income, capital gains, real estate and other wealth assets. As they struggle to use these tax instruments more widely to generate additional fiscal revenues by better covering personal income and wealth in the tax base, they find social, political and administrative hurdles difficult to overcome at the national level.

Initiatives to enhance domestic resource mobilization (DRM) efforts in developing countries, in order to meet the Sustainable Development Goals (SDGs), could fail if those with higher ability to pay taxes, firms and individuals, do not contribute their fair share. This could also entail a bias towards low/middle income taxpayers who often do not own capital or physical assets, but only have their human capital and labor skills to offer, further increasing the perception that tax systems hurt the poor. In addition, lack of transparency enforcing tax rules on those with higher ability to pay would only contribute to aggravate this perception of unfairness. Developing countries alone will not be able to meet their DRM objectives without global solutions to these challenges that are largely beyond their control.

On the other side of the spectrum of tax “war“ pressures emerging from avoidance and evasion schemes, new consensus seems to be emerging to globally enforce corrective tax instruments, on goods whose consumption creates social negative externalities, such as tobacco and CO2 emissions. Tobacco taxes could represent a win-win for developing countries in terms of improving public health, while generating additional fiscal revenues. Similarly, carbon taxes could help mitigate climate change and contribute to reduce the welfare divide between developing and more advanced countries. In both cases, regional and global tax coordination and tax cooperation will be necessary to achieve those ambitious goals.

Day 1: Monday, May 23, 2016

08:15 – 9:00

Coffee and Registration

09:00 – 9:15 Jan Walliser, Vice-President, Equitable Growth, Finance and Institutions (EFI)
09:15 – 10:00 Session I: Tax Competition: Are We at War?  A Historical Review

 

Countries around the world are competing on tax rates and ownership of the tax base, often resulting in harmful tax behavior. This panel will provide a historical perspective of how tax competition has resulted into global “tax wars” between multinational companies and wealthy elites, and the tax administrations, and between countries (regardless of their development levels), with significant spillovers for developing countries.

Moderator:

Blanca Moreno-Dodson, Lead Economist, Global Tax Team, World Bank

Panelists:

 

 

Vito Tanzi, Fiscal Affairs Expert and author of the first book on tax competition “Taxation in an Integrating World” in 1995

Michael Keen, Deputy Director of the Fiscal Affairs Department of the International Monetary Fund

Erika Dayle Siu, Tax Attorney and Consultant, Independent Commission for the Reform of International Corporate Taxation

10:00 – 10:15 Networking Break

10:15 – 11:30

Session II: Tax Competition: An Unleveled Playing Field for DevelopingCountries? 

 

Developing countries are often compelled to lower corporate income tax rates and/or provide particular tax advantages to firms, which do not only have a high ability to pay, but also the sophistication to articulate worldwide tax planning and avoidance strategies. They do it with the goal to “win” investments, economic activity and job creation, over competitor countries. At the same time, given their own socio-economic and institutional constraints, they face tremendous challenges to raise fiscal revenues from other tax instruments. Representatives from international organizations (World Bank, IMF, OECD, UN and the South Center) will discuss how tax competition affects particularly the ability of developing countries to enforce a legitimate contract between governments and tax payers. They will also present different perspectives on how global tax rules could be improved to keep pace with a rapidly changing global business environment, without further aggravating income disparities between developing and advanced countries.

Moderator: 

Lyne Latulippe, Professor of Taxation, Master of Taxation, University of Sherbrooke

Panelists:

Jim Brumby Director, Public Service and Performance, Governance Global Practice, World Bank

Victoria Perry, Assistant Director in the Fiscal Affairs Department and Division Chief of the Tax Policy Division at the International Monetary Fund

Grace Perez-Navarro, Deputy Director, Centre for Tax Policy and Administration, The Organization for Economic Co-operation and Development

Manuel Montes, Senior Advisor for Finance and Development, The South Center (by VC)

11:30 – 12:30

Session III: Tax Competition, Tax Coordination and Tax Cooperation in a Globalized World

 

Domestic tax policy is under pressure to design a tax system that distorts economic activity in order to stay competitive in a globalized world. This panel will offer insightful thinking from national leaders about how countries can protect their tax sovereignty in a globalized world, whether or not it is possible to achieve tax coordination, and how to better protect the tax base of developing countries through better tax cooperation.

Speaker: Michael Sell, Head of Tax Department, German Ministry of Finance

Moderator: 

Vanessa Houlder, Tax Journalist, Financial Times

Panelists:

 

 

Michel Sapin, Finance Minister France (via video)

Cristina Duarte, Former Finance Minister Cabo Verde 2006-2016

Juan Ricardo Ortega, Former Tax Director and Advisor to the Minister of Finance, Colombia

12:30 – 14:00 Lunch

14:00 – 14:20

Keynote Speech: Reducing Secrecy and Improving Tax Transparency

 

Senator Carl Levin, Former U.S. Senator from Michigan and chairman of The Permanent Subcommittee On Investigations; Chair of the Levin Center at Wayne State University Law School

Presenter: Brigitte Alepin, Tax Policy Advisor, Writer and Expert Witness for the House of Commons and the Canadian Senate.

14:20 – 15:00

Session IV: How Tax Transparency Could Lead to Better Global Tax Rules

This session will illustrate how government-led investigations can advance public discourse on the enduring problems of international tax competition and what we can learn from tax investigations. The session will also reflect on how better exposure to tax evasion data, as revealed in the recent Panama Papers, could lead to better enforcement of tax rules and more effective design of anti- avoidance mechanisms globally.

Moderator:

Richard Rubin, U.S. tax policy reporter for The Wall Street Journal in Washington

Panelists:

Elise Bean, Former Staff Director and Chief Counsel of the U.S. Senate Permanent Subcommittee on Investigations. One of Washington’s 100 most powerful women (2011, 2013).

Omri Marian, Assistant Professor of Law, University of California, Irvine school of Law.

15:00 – 16:00

Session V: Taxing Multinationals in a Globalised World

In a globalized world where capital is mobile across boundaries and where multinational firms play an increasing role in trade and investment, the design of “competitive” tax policy (instruments, structure and rates) faces the additional challenge of countering the sophisticated and aggressive tax planning strategies of firms. This session will discuss current issues and possible alternatives for taxing multinationals in a globalized world. Further, different scenarios to find mutually agreeable approaches  will be discussed.

Finally, the session will elaborate on what the World Bank is doing in the area of international taxation in developing countries, in order to protect their tax base, as well as to shield national businesses from harmful competition as a result of tax avoidance by multi-national companies.

Moderator:

Vanessa Houlder, Tax Journalist, Financial Times.

Panelists:

El Hadji Ibrahima DIOP, Directeur du Contrôle Interne, Direction Générale des Impôts et des Domaines, Sénégal

Dereje Alemayehu, Chair of the Global Alliance for Tax Justice and Senior Economic Policy Advisor of Tax Justice Network Africa

Prof. Rita de la Feria, Professor, Chair in Tax Law, University of Leeds

Bill Parks, Educator, Entrepreneur, and Business Professional, founder of NRS, Inc.

16:00 – 16:15 Networking Break

16:15 – 17:30

DEBATE

Tax Competition or Tax Cooperation? Consequences for Developing Countries

 

The purpose of the debate is to discuss two opposite views:

(a) Tax competition (over tax rates, tax base and asset ownership) is up to each country individually and no intervention in the global market is needed because it works best when left alone to sort out winners and losers.

(b) Tax cooperation - including possible regional and global arrangements around tax rates, asset ownership, and information sharing - is necessary because tax competition pressures worldwide are creating an unfair playing field and harming developing countries.

This issue will be explored through a series of three resolutions, as follows:

1. First, be it resolved that: tax competition harms developing countries  by reducing their capability to raise fiscal revenue to finance physical and social infrastructure, needed for economic growth and social inclusion.

2.  Second, be it resolved that: tax competition increases developing countries’ reliance on foreign aid, therefore making them more vulnerable to aid volatility.

3.  Third, be it resolved that: tax competition aggravates existing income disparities between developed and developing countries.

 

Presenter Brigitte Alepin, Tax Policy Advisor, Writer and Expert Witness for the House of Commons and the Canadian Senate.
Moderators Professor Allison Christians, Associate Professor, H. Heward Stikeman Chair in Tax Law, McGill University

Debaters:

Alison Holder, Director of Policy, Advocacy and Campaigns at ActionAid

  Veronique de Rugy, Senior Research Fellow at the Mercatus Center at GeorgeMason University 

Jury:

Jay Rosengard, Lecturer in Public Policy, Harvard Kennedy School of Government and Academic Director Rajawali Foundation Institute for Asia, Ash Center for Democratic Governance and Innovation

Hon. Louise Otis, International Judge, President OECD Administrative Tribunal

17:30

Cocktail

Day 2: Tuesday, May 24, 2016

8:15 – 9:00

Coffee

9:00 – 10:30

Session VI: Expanding the Global Tax Base: Taxing to Promote Public Goods, Tobacco Taxes

This session will examine the use of tobacco taxes to reduce harmful behavior for health, and prevent ill health, premature mortality and disability while raising fiscal revenues and reducing health care expenditures, with particular lessons for developing countries.

Speakers:

Prof. George Akerlof, 2001 Nobel Prize Laureate in Economics, and University Professor at Stanford University and Georgetown University

Prof. Philip Cook, ITT/Terry Sanford Professor of Public Policy Studies, Duke University

Jason Furman, Chairman, Council of Economic Advisers, Executive Office of the President of the United States

“Policy, Politics, and the Tripling of Federal Tobacco Taxes in the United States to Deter People from Smoking, Save Lives, and Mobilize Revenue over the last 30 years”

Moderator: Patricio Marquez, Lead Public Health Specialist and Co- Coordinator Global Tobacco Control Program, Health, Nutrition and Population (HNP) Global Practice, the World Bank

Panelists:

Jeremias Paul, formerly Under Secretary of Finance of the Philippines and now Coordinator, Tobacco Economics Program, WHO

Rose Zheng Ph.D, Director, WHO Collaborating Center for Tobacco and Economics Professor, School of International Trade and Economics (SITE), University of International Business and Economics (UIBE), Beijing, China

Pablo Ferreri, Undersecretary of Economy and Finance, Uruguay

10:30 – 11:00

Coffee Break. Book Signing

“Phishing for Phools. The Economics of Manipulation & Deception” by George A. Akerlof and Robert J. Shiller: To be signed by Prof. George Akerlof, 2001 Nobel Prize Laureate in Economics, and University Professor at Stanford University and Georgetown University

“Paying the Tab The Costs and Benefits of Alcohol Control”: To be signed by Prof. Philip Cook, ITT/Terry Sanford Professor of Public Policy Studies, Duke University

11:00 – 12:00 Session VII: Expanding the Global Tax Base: Taxing to Promote Public Goods, Carbon Taxes

 

Carbon taxes can contribute to improve social welfare by reducing negative externalities due to a polluted environment. This session will focus on how the design of carbon taxes could be coordinated regionally and globally, in order to reverse tax competition. Further the discussion will draw lessons for developing countries based on current worldwide trends in environmental tax policies.

Moderator:

Adam Komiuszewski Executive Director Green Cross International

Panelists:

William S. Becker,  Executive  Director  of  the  Presidential  Climate Action Project (PCAP), an initiative of Natural Capitalism Solutions

Corinne Lepage, French Minister of the Environment (1995-1997), Member of the European Parliament 2009–2014

12:00 – 13:00 PM Session VIII: How to Tax Wealth Better. Other Tax Instruments?

 

Taxing stored wealth in the hands of capital owners and the beneficiaries of their estates could become a preferred solution towards reducing income disparities globally. This session will explore the feasibility of introducing other tax instruments to tax wealth better, in order to contribute to more equitable tax systems. Further lessons for developing countries and global tax coordination will be explored.

Moderator:

Prof. Lilian Faulhaber, Associate Professor of Law, Georgetown University

Panelists:

Prof.  Richard  Murphy,  Professor  of  practice  in  international    political economy at London City University, technical director of the Fair Tax Mark and director of Tax Research UK

Prof. Eric M. Zolt, Michael H. Schill Distinguished Professor of Law, UCLA School of Law

Joe Thorndike, Director of the Tax History Project at Tax Analysts and contributing editor for Tax Notes magazine 

13:00 PM

Closing Remarks

 

different scenarios to find mutually agreeable approaches  will be    discussed.

Finally, the session will elaborate on what the World Bank is doing in the area of international taxation in developing countries, in order to protect their tax base, as well as to shield national businesses from harmful competition as a result of tax avoidance by multi-national companies.

different scenarios to find mutually agreeable approaches  will be    discussed.

Finally, the session will elaborate on what the World Bank is doing in the area of international taxation in developing countries, in order to protect their tax base, as well as to shield national businesses from harmful competition as a result of tax avoidance by multi-national companies.

different scenarios to find mutually agreeable approaches  will be    discussed.

Finally, the session will elaborate on what the World Bank is doing in the area of international taxation in developing countries, in order to protect their tax base, as well as to shield national businesses from harmful competition as a result of tax avoidance by multi-national companies.

DETAILS
  • WHEN: May 23-24
  • Where: Preston Auditorium, World Bank Headquarters



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Time

Day 1:
2:00pm – 5:00pm (ET) / 18:00 - 21:00 (GMT)
Day 2:
9:00am – 10:30am (ET) / 13:00 - 14:30pm (GMT)