Assessing Tax Spillovers

Purpose

This half day workshop will gather experts, campaigners and politicians to discuss tax spillover assessments. Tax spillovers refer to the impact one country’s tax practices and rules have on other countries, and also to the impact one tax within a jurisdiction might have on another tax in the same country.

The following questions will be considered:

• Do we need regular tax spillover assessments?
• What is the legitimate purpose of tax spillover assessments? What objectives should they have? Why conduct spillover assessments?
• Can policy reforms that generate enhanced economic performance and fairer and more equal tax systems, both domestically and internationally, be identified and incentivised by tax spillover assessments?
• What is the current thinking on tax spillovers in academia, civil society, international organisations and the policy community?
• What level of political appetite exists for tax spillover assessments?
• Are there practical workable ways of conducting spillover assessments on a country by country basis? What features should characterise spillover assessments?

Rationale

The concept of tax spillover is premised on the idea that some tax policies and practices can spillover to harm other areas of tax policy, and other countries’ tax bases by reducing tax revenue and flows of inward investment.  In 2014 an IMF paper reported losses brought about by spillover effects, finding that a 1% reduction in corporation tax in one state, reduced the corporate tax base in a typical state elsewhere by 3.7%. Estimated revenue loss using a gross operating surplus method compared with actual corporate tax revenues, suggested an average loss of 13% for non-OECD countries. Since then many development NGOs have made the case for all countries to enter into regular tax spillover assessments, to enable these harmful effects to be identified and ameliorated, while interest amongst international organisations in spillover assessments has grown. However, until now the international community has lacked a tool kit, or method of assessment for conducting systematic evaluations of spillover effects on a country-by-country basis.

The basis for discussion

In a recent paper published in Global Policy, Andrew Baker and Richard Murphy presented a framework for conducting systematic recurrent evaluations of tax spillover risks and vulnerabilities on a country-by-country basis. The purpose of this half day workshop, is to mark the publication of that framework and its initial trial application by gathering groups of experts, policy makers and campaigners to debate and establish:

1. the case for conducting spillover assessments;
2. what the overarching purpose and objectives of spillover assessments should be;
3. timing – whether the need for spillover is particularly pressing and opportune in the current moment;
4. the countries that should initially be focused on;
5. the form these assessments could and should take and the methods they should use;
6. what spillover assessments can achieve in terms of highlighting bad spillover performance,  in identifying and incentivising policy reform, and ultimately in improving the integrity and efficiency of tax systems worldwide;
7. which actors and processes should be involved in formulating and conducting these assessments.

Timetable

14.00 -15.30 Session 1: Roundtable Discussion: Do we need spillover assessments, what can they accomplish, how and where should they be conducted? Chair: Andrew Baker

Joe Stead (OECD)

Oli Pearce (Oxfam)

Kasia Szeniawska (Action Aid)

Tove Maria Ryding (EURODAD)

Juan Pablo Guerrero (Director of the Global Initiative on Fiscal Transparency, convened by the World Bank) 

15.45 -17.00 Session 2: Richard Murphy: What conducting a UK tax spillover analysis revealed? Results, recommendations and lessons

Respondent 1: Anneliese Dodd (UK Labour Party, Shadow Treasury Team).

Respondent 2: John Christensen (Board Member UNDP Tax Inspectors Across Borders and chair Tax Justice Network)

17.00 Closing session 3: Summary conclusions, recommendations and joint statement release, drinks reception.

To attend please email both:

Andrew Backer (a.p.baker@sheffield.ac.uk)

and

Richard Murphy (richard.murphy@taxresearch.org.uk)