Monday, May 5, 2014

Ireland To Analyse Tax System's Impact on Developing Nations

This is a story to watch: Ireland is going to "review the impact its tax system may have on the economies of developing countries" with a "spillover analysis" research project that "will be conducted by consultants and overseen by a steering group consisting of officials from the Finance and Foreign Affairs Departments."

This is a fascinating development. I have long argued that tax competition is as much or more a supply side phenomenon as a demand side one, that is, it is nonsense to tell developing countries to lay off the tax incentives and get serious about taxing multinationals without looking at those MNC's home countries that are not effectively taxing these flagship companies and are therefore sending them out into the world looking for the best tax deals they can find. It seems patently obvious that anyone who is thinking about the connection between taxation and development really has to look at taxation as a globally integrated system even though it's more or less a Hobbesian war of all against all when it comes to setting national tax policy.

As a result, Ireland's request for research proposals is of great interest. From the story linked above:
The Government has published a request for Proposal/Tender outlining its aims and asking that prospective consultants provide details of suitable methodologies for their work. A public consultation document has also been released, and invites interested parties to make submissions. The initiative forms part of a broader effort to clarify Ireland's approach to international corporate tax issues. ... Ireland is further pledged to support such countries in raising domestic tax revenues in an efficient way, to promote good governance and equitable development, and enable them to eventually exist independently from official development assistance. The Department has also described the spillover analysis as a response to calls from the Group of 20 nations and civil society groups for all countries to be aware of these issues when formulating their own tax policy.
I look forward to watching this unfold.

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