Skatteudvalget 2009-10
SAU Alm.del Bilag 291
Offentligt
Organisation for Economic Co-operation and Development
Taxation andthe financial crisisPresentation to Danish ParliamentariansParis, 9 September 2010Jeffrey OwensDirector of the Centre for Tax Policy and AdministrationOrganisation for Economic Co-operation and Development[email protected]
Centre for Tax Policy and Administration
Tax role in financial instability?
Bias in favour of debt (leverage)?Tax and bank capital adequacy?Capital gainsversusincome (risky debt)?Tax havens and SPVs?Mortgage interest deductibility andbelow-neutral housing taxation?Arbitrage opportunities from derivatives?Tax was not a primary driver of the business model
which led to the crisis …..
…. but may have reinforced it in various ways
2
2
What’s special about taxationof the financial sector?
Difficulty in identifying financial income andcategorising transactions for tax purposesCompromise nature of taxing capital incomeAccounting / regulatory / tax tensionsHigh mobility of tax baseTax neutrality benchmarkversuswidespread financial market failures
3
3
Lessons for taxing financial sectorin the future
Take opportunities to address non-neutralitiesResponse to market failures – primary tool isregulation, but tax may have a role,e.g.inaddressing linkages between tax and risk-taking,and opportunities for tax and regulation to bemutually reinforcingFiscal consolidation – gives opportunity toreduce distortions, reduce tax driven-arbitrage,reduce tax compliance risk
Whether or not tax was part of the problem ….
…. it should be part of the solution
44
Taxing the financial sector– a repair agenda
Better access to and use of 3rd party informationBuilding tax transparent tax compliance by banksExploring potential for multilateral approaches toachieving better complianceTackling international tax arbitrage
Plenty of debate on new taxes levies …..
…… but also scope for repairing the current tax system
alongside repair of the banking system
5
5
