Geneviève Verdier Fiscal Affairs Department International Monetary Fund Chapter 2 of the April 2018 Fiscal Monitor April 2018

Transcription

1 Digital Government Geneviève Verdier Fiscal Affairs Department International Monetary Fund Chapter 2 of the April 2018 Fiscal Monitor April 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 What governments are doing Tax policy and administration Digital tax administration systems E-filling, e-invoicing Pre-populated tax returns Mobile payments Big data analysis Cross-border exchange of information Public spending and financial management Public service delivery: Information dissemination (health, agriculture) Biometric identification and digital payment systems Digital monitoring (education) Governance: Transparency portals Access to national websites Number of countries with selected digital services Create personal online gov. accounts File income tax Citizens Register a business Automated financial management Customs processing Tax management Digital identification Government administrative functions 4

5 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 5

6 What governments can do now

7 Improving tax compliance: Customs Could digitalization help reduce fraud in cross-border transactions? Trade misreporting is non-trivial, particularly in LIDCs Difference between importer and exporter reported values in percent of GDP but VAT-related fraud is also a concern in Europe The Missing Trader and Carousel Fraud United Kingdom: Company C France: Company A Buys goods at VAT inclusive price, and exports goods to France, reclaiming the VAT not paid by B. French company A exports VAT zero-rated goods to B in another member country (United Kingdom). AEs EMEs LIDCs Pays no VAT on purchase, charges VAT on sale to company C, and disappears without remitting the VAT. United Kingdom: Company B "Missing trader" The EC estimates that EUR billion are lost annually 7

8 Improving tax compliance: customs The link between evasion and digitalization is significant and potential revenue gains are substantial Potential Tariff Revenue Gains Potential VAT Revenue Gains AEs EMEs LIDCs AEs EMEs LIDCs Median revenue potential is between 1 to 2 percent of GDP. In Europe, total gains of 0.5 percent of European GDP in VAT collection. 8

9 Improving tax compliance: Tax havens Could digitalization help reduce evasion to tax havens? Wealth sheltered in tax havens is large Offshore Wealth The share of European financial wealth held in tax havens has grown dramatically 10 Estimated Wealth of Europeans in Low-Tax Jurisdictions (Percent of the financial holdings of European households) AEs EMEs LIDCs

10 Improving tax compliance: Tax havens 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 10

11 Improving social protection coverage Inclusion (leakages) and exclusion (non take-up) errors are sizeable In developing economies, coverage of the poor is far from complete Household Coverage by Social Assistance Programs in Developing Countries (percent of households in income quintile) Poorest quintile In Europe, 1/3 of total spending on means-tested programs is going to the top 6 income deciles Average Share of Total Spending on Means-Tested Social Assistance Programs in EU 28 (percent of total spending across income deciles) Upper-middleincome countries Lower-middleincome countries Low-income countries Income deciles Sources: EUROMOD; World Bank, Atlas of Social Protection Indicators of Resilience and Equity (ASPIRE); and IMF staff calculations. 1/ EU-28 = European Union group of 28 countries (Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Sweden, Spain and United Kingdom). 11

12 Improving social protection coverage 12

13 Improving social protection coverage India LPG subsidies France Social benefits India LPG subsidies France Social benefits India LPG subsidies France Social benefits 13

14 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) 14

15 Challenges, obstacles and risks

16 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 16

17 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 17

18 Obstacles and risks Digital exclusion Resources Institutional capacity 18

19 Obstacles and risks Fraud Privacy and cybersecurity 19

20 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 20

21 Thank you!