Governments should use tax systems to drive inclusive growth agenda | WPN World People News

Governments should use tax policy to drive forward economic agendas that seek to boost growth while sharing the benefits more evenly within society, according to a new OECD report.

Tax Design for Inclusive Economic Growth examines the role that tax systems play in promoting inclusive growth. Against a backdrop of historically high income and wealth inequality, this new OECD research underlines the key role that tax policy can play in not only supporting growth, but also in addressing distributional concerns.

The OECD work will be a key subject of discussion during a ministerial-level G20 Tax Symposium on July 23 in Chengdu, China, just prior to the meeting of the G20 Finance Ministers and Central Bank Governors on 23-24 July.

The Symposium - hosted by G20 President China, in co-operation with Germany, which will preside over the G20 in 2017, and with the support of the OECD – will offer G20 Finance Ministers and high-level policymakers the opportunity to discuss how to better use tax policy tools to drive forward the inclusive, pro-growth agenda while providing businesses with greater tax certainty, to promote trade and investment.

“Tax policy has a clear role to play in helping achieve strong, sustainable and balanced growth,” OECD Secretary-General Angel Gurría said. “We are confident that the OECD’s latest research on tax design for inclusive growth can become part of a new tax policy contribution to the G20 agenda moving forward.”

Tax policy design options to be considered are grouped under four broad categories:

● broadening tax bases and removing tax expenditures that are not well-targeted at redistributive goals;

● enhancing the progressivity of tax systems beyond personal income tax and taking into account the overall progressivity of the tax and benefit system;

● taking steps to affect pre-tax behaviours and opportunities, including those that induce individuals to develop and optimally build up and use human capital and skills; and

● enhancing tax policy and administration, notably by bringing workers from informal sectors into the tax network through well-designed policies.

The OECD suggests that further analysis be undertaken to identify the scenarios where tax reforms stimulate inclusive growth and those where they do not, and how such tax reforms will interact with a country’s existing tax policy settings, its level of inequality and its stage of development.

Source: Organization for Economic Co-operation and Development