Fiscal Affairs Department Chapter 2 of the April 2018 Fiscal Monitor Peterson Institute for International Economics April 12, 2018

Transcription

1 Digital Government Fiscal Affairs Department Chapter 2 of the April 2018 Fiscal Monitor Peterson Institute for International Economics April 12, 2018

2 Digital government 2

3 The digital transformation is underway The rapid growth of the digital transformation is outpacing the provision of basic public services Digital technologies are spreading across governments, with some regional leaders Access to Public and Digital Services in Developing Countries (Percent of population) International Digital Adoption by Governments (Digital adoption index for governments, latest available year) USA CAN EST ESP ARE ISR KAZ RUS CHL URY KOR SGP RWA ZAF Improved water access Internet Improved sanitation Mobile phone Electricity Mobile broadband Source: World Bank CYP SMR SYR LBY TJK TKM KNA FSM TUV MHL CAF GNQ NA EUR MENA CIS LAC AP SSA 3

4 Outline 1. What governments can do now Reducing tax evasion from cross-border fraud Lowering revenue losses from personal income and wealth sheltered in tax havens Reducing leakage and take-up problems in social protection 2. Challenges, obstacles and risks Fiscal policy and digital businesses A new challenge Digitalizing public finances Obstacles and risks 4

5 What governments can do now

6 Improving tax compliance: Customs Could digitalization help reduce fraud in cross-border transactions? Trade misreporting is non-trivial, particularly in LICs Difference between importer and exporter reported values in percent of GDP and potential revenue gains from digitalization are substantial Potential VAT Revenue Gains AEs EMEs LIDCs AEs EMEs LIDCs The link between evasion and digitalization is significant Median revenue potential from VAT is between 1 to 2 percent of GDP 6

7 Improving tax compliance: Tax havens Could digitalization help reduce evasion to tax havens? Wealth sheltered in tax havens is large Revenue gains on existing wealth are low. But increased taxpayer information could facilitate Collect taxes before income is transferred to tax havens Design and success of automatic exchange of Information on taxpayers AEs EMEs LIDCs 7

8 Improving social protection coverage India LPG subsidies France Social benefits India LPG subsidies France Social benefits India LPG subsidies France Social benefits 8

9 Improving social protection coverage Digitalization can help but is only part of the solution Comprehensive reforms (India) Privacy and security controls are essential (India and South Africa) Digital exclusion can put program objectives at risk (India) Digital outreach tools are not sufficient (France) 9

10 Challenges, obstacles and risks

11 Taxation and the digital economy Tech giants are increasingly dominant The Race to a Trillion Global Top 20 Firms By Stock Market Capitalization (Billions of US dollars, March 7, 2018) High profitability Technology companies Other companies Nestle Walmart Royal Dutch Shell Visa Wells Fargo CCB ExxonMobil Bank of America Samsung Johnson & Johnson ICBC JP Morgan Chase Alibaba Berkshire Hathaway Facebook Tencent Microsoft Amazon Alphabet (Google) Apple Heavy reliance on intangible assets Sales with little or no physical presence User-generated value 11

12 Taxation and the digital economy What is different? The scale of operations. But they should not be singledout for taxation purposes Measures should be internationally coordinated and consistent with a long-term vision for international corporate taxation 12

13 Obstacles and risks Digital exclusion Resources Institutional capacity Fraud Privacy and cybersecurity 13

14 Policy implications Digitalization is transforming how we live and the conduct of policy Governments cannot stay on the sidelines of this transformation Overcoming challenges will require: A comprehensive reform agenda Risk mitigation Adequate resources International cooperation 14

15 Thank you!