Macron: Countries must work together to fix flawed tax system

31 May 18

The international tax system is “fundamentally flawed” and countries must work together to fix it, the French president warned yesterday.

 

Emmanuel Macron told delegates in a keynote speech at the OECD’s Forum 2018 – for which Public Finance International was a media partner – it was crucial to build a “strong multilateral system”.

This was needed to tackle the global issues like equality, trade tensions and climate change, the French president said at the event in Paris.

Currently the international tax system is creating uncertainty and inequality, and it must be modernised to cope with economies becoming increasingly digital, he said.

“We can only move forward if we are fully accountable. And I cannot give a fair account to our citizens of the current tax architecture because it is fundamentally flawed,” he said.

Macron added the only acceptable international tax system was one that was “fair and subject to regulation”, and that could be explained to citizens, those who pay their “share of tax”.

The OECD has been at the forefront of creating a fairer and more transparent tax system through the introduction of the base erosion and profit shifting (BEPS) initiative in the fight against tax avoidance, which more than 100 countries have backed.

This initial work by the Paris-based organisation was a “huge step forward” and had brought the issue of world tax governance to the attention of countries from all regions of the world, Macron said.

But countries “need to do more” and go “beyond what has been done by the OECD”, the president said.

“The system that we live in is not a sustainable system,” he added.

“We need to restore tax justice and that means tackling all taxation circumstances, such as non-taxation which is an open pathway towards tax fraud and avoidance.” 

He highlighted recent events, such as the Facebook data and Cambridge Analytica scandals, have changed what is considered acceptable and more people are demanding change.

“There has to be an international solution for a fairer framework. I am convinced that we need a fast and speedy response to this,” he added.

He also said that money laundering and corruption undermined trust in governments and the international community should “speedily” address this.

Additionally, the president said that to fix the problems that the world is facing, countries and organisations must work together.

He said: “We have to build a better multilateralism.

“When international cooperation is weak, it is our duty to shore it up. But having authoritarianism as a solution is forgetting our history and its lessons,” he said, referring to the World Wars.

The European Union has proposed new rules to ensure that taxation remains fair in a digital economy, Macron highlighted. He also mentioned the new EU regulation on data protection. 

In the session before Macron’s speech, the French finance minister Bruno Le Maire said: “In taxation, we see with the development of digitalisation. We need to work collectively to work on the new taxation [system] in the digital era.”

At the forum on Tuesday and Wednesday, which was attended by more than 3000 people from around the world, the OECD also called for more inclusive and sustainable growth and said countries must use the global economic upswing to reform to achieve this.

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