TAX REFORM TRENDS IN OECD COUNTRIES INTRODUCTION Over the last two decades almost all OECD countries have made major structural changes to their tax systems. In the case of the personal and corporate income tax regimes reforms have generally been rate reducing and base broadening, following the lead given by the United Kingdom in 1984 and the United States in 1986. In the mid-1980s, many OECD countries had top marginal personal income tax (PIT) rates in excess of 65 per cent. Today most top rates are below, and in some cases substantially below, 50 per cent (average top PIT rate in 2009 was 41.5%). Similarly, top statutory corporate income tax rates in the 1980s were rarely less than 45 per cent. In 2010, the OECD average rate was below 27 per cent and an increasing number of countries have rates below 25 per cent. In some countries (for example, many of the Eastern European economies in transition, along with Australia and New Zealand) reforms have been profound and sometimes implemented over a very short period of time. In others, including most of Europe, Japan and many other Asian countries, reform has been a gradual process of adaptation but over time many countries have substantially redesigned their tax systems. This note presents data that illustrate how, despite there being 31 countries in the OECD (Chile recently joined the OECD), trends in tax rates and burdens show more common themes than differences. It first discusses why this might be the case and then presents some charts covering a. Top rates of personal income tax, 1981, 1994, 2009; b. Statutory corporation tax rates, 2000 and 2010; c. Combined top corporate and personal tax rates on dividends in 2000 and 2010; d. The combined burden of tax and social security contributions on an average family in 2000 and 2009; e. Aggregate tax burden in relation to GDP; f. Summary of latest international comparisons of tax receipts and rates. Finally there are a few concluding remarks on tax policy in the current economic climate.
DRIVERS OF REFORM What has driven this trend toward lower tax rates? A number of common factors can be identified. There has, for instance, been a widely perceived need to provide a fiscal environment that encourages investment, risk-taking and entrepreneurship; and provides improved work incentives. In many case, the response to this driver has reflected a common intellectual framework that points to a combination of broad tax bases and low rates being the best way to collect revenues while ensuring that taxes distort business and household decisions as little as possible. The tax reforms of major countries, and in particular the United States, have been influential in generating support for such an approach. Another key driver has been globalization. Trends associated with globalization have included significantly increased cross-border ownership of business, through both direct and portfolio investment. It has also become more difficult for tax authorities to establish where profits have been earned. By the same token the liberalization and integration of markets has increased the salience of pre-existing differences in the tax regimes applied to income and capital gains (and to the returns on debt and equity), as well as differences in tax rates between countries. This in turn has encouraged financial innovation such as the development of new derivatives and investment vehicles to exploit these differences. It has similarly facilitated cross-border tax planning; and more aggressive avoidance and evasion. For many OECD countries tax competition has thus been a major shaper of policy. It has encouraged countries to make their business tax regimes more attractive, particularly through reductions in statutory corporation tax rates, to encourage investment. While globally investment is likely to have been higher, there is a risk that investment may have been diverted by tax considerations away from the location where (pre-tax) returns would have been greatest. Furthermore, favorable regimes have been developed by some tax jurisdictions to attract profits and tax receipts away from the countries where investment actually takes place. These competitive pressures raise questions about whether more international cooperation on tax policy might be desirable to avoid tax competition having pernicious effects. Governments have to maintain taxpayers confidence in the integrity of their tax systems. Fairness, simplicity and transparency have become the bywords of reformers. Fairness requires that taxpayers in similar circumstances pay similar amounts of tax and that the tax burden is appropriately shared. Simplicity requires that paying your taxes becomes as straightforward as possible; and that the administrative and compliance costs of collecting taxes are kept at a minimum. Transparency requires that the operation of the tax system is well understood, helping provide the certainty which investment and other economic decisions require. All have played a part in shaping tax reforms. 2
SWE BEL NLD DNK AUT JPN FIN FRA GER AUS CAN ITA SPA PRT US SWI IRL GRC NOR UK LUX KOR NZL ICL HUN TUR POL MEX SVK CZE TRENDS IN TAX REVENUES AND STRUCTURES a. Personal Income Tax Rates The trend towards reduced marginal tax rates started in the mid-1980s in most countries, with the US reforms of 1986 being particularly influential. In the late 1970s it was not uncommon to find top marginal personal income tax rates above 70 per cent, while these rates are now well below 50 per cent in a majority of OECD countries. By the mid 1990s the most significant cuts in top rates had already been made. See Figure 1. Further reforms in the past decade have reduced the unweighted OECD-average top statutory personal income tax rate by 5 percentage points. Since 2000 top rates have been reduced by 7 percentage points or more in 11 countries Belgium, the Czech Republic, Denmark, France, Iceland, Luxembourg, Mexico, the Netherlands, Norway, Poland and the Slovak Republic. The top PIT rate has decreased on average by 4.8 percentage points in the United States. Figure 1. Top statutory personal income tax rates on wage income 1981, 1994 and 2009 1 100 1981 2009 1994 90 80 70 60 50 40 30 20 10 0 1. The statutory personal income tax rate on wage income applicable at the highest income threshold for single individuals. Sub-central government taxes are also included; for the United States, the tax rates are based on a worker living in Detroit, Michigan. Source: OECD Tax Database (www.oecd.org/ctp/taxdatabase). b. Corporate Income Tax Rates The trend towards a reduction of corporate income tax rates started with the tax reforms in the United Kingdom and the United States in the mid-1980s which broadened the tax base (e.g. by making depreciation allowances for tax purposes less generous) and cut statutory rates. Corporation tax rates have continued to be cut in recent years. 3
JPN US FRA BEL GER AUS MEX NZL SPA CAN LUX NOR UK ITA PRT SWE FIN NLD AUT DNK KOR GRC SWI TUR CZE HUN POL SVK ICL IRL Figure 2 shows that the statutory corporate income tax rates in OECD member countries dropped on average 7.4 percentage points between 2000 and 2010, from 33.6 per cent to 26.2 per cent. This trend seems to be widespread, as rates have been reduced in 28 countries and increased only in Hungary (from 18 per cent to 19 per cent). In the EU15 countries, the unweighted average corporate tax rate dropped by an average of 8.2 percentage points, from 35.1 per cent to 26.9 per cent. Japan, despite cutting its corporate income tax rate in 2004, continues having the highest rate. It appears that large economies like Japan and the US have greater effective sovereignty over their corporate tax policies than smaller economies. Figure 2. Statutory corporate income tax rates, 2000 and 2010 Top CIT rate 2000 Top CIT rate 2010 50 OECD average in 2000 (33.6%) and 2010 (26.2%) 40 30 20 10 0 1. Data ranked by 2010. Sub-central government taxes are also included; for the United States, it is based on a weighted average of state marginal corporate income tax rates. Source: OECD Tax Database (www.oecd.org/ctp/taxdatabase). c. Taxation of Dividends The rate of personal taxation on dividends has fallen in recent years, largely as a result of falls in corporate income tax rates, though there have also been cuts in the rates of personal income tax applied to dividends. Figure 3 shows the top marginal tax rates on distributions of domestic source profits to a resident individual shareholder. It takes account of the fact that profits are usually taxed both at the corporate level (where the assumption is that they bear the statutory corporation tax rate) and again when they are distributed as dividends. The figures show that on average, the top marginal tax rate on dividends in OECD-countries was reduced by 8.3 percentage points between 2000 and 2010, from 50.0 per cent to 41.7 per cent. In the EU15, the unweighted average tax rate fell by 6.6 percentage points, from 51.8 per cent to 45.3 per cent. A recent trend is the move away from full imputation systems in many European countries to systems where dividends are taxed at a lower rate at the personal level. Several countries have or 4
DNK FRA UK US GER SWE IRL CAN NOR KOR AUS JPN NLD BEL AUT SPA LUX PRT FIN HUN NZL SWI ITA POL TUR GRC CZE MEX ICL SVK are in the process of introducing tax systems that tax dividends at the personal shareholder level at lower rates than the personal income tax rates that are levied on wage income. One reason for reducing the effective tax rate on dividends has been that it is potentially the rate faced by a new business considering starting up (since such a business does not have retained profits from existing business activities available to reinvest). Figure 3. Overall statutory rates on dividend income 1, 2000 and 2010 80 Overall top tax rate on dividend income 2000 Overall top tax rate on dividend income 2010 70 OECD average in 2000 (50%) and 2010 (41.7%) 60 50 40 30 20 10 0 1. This tax rate is the overall top marginal tax rate (corporate and personal combined) on distributions of domestic source profits to a resident individual shareholder, taking account of imputation systems, dividend tax credits etc. Sub-central government taxes are also included; for the United States, it is based on a weighted average of state marginal corporate income tax rates and state marginal income tax rates on dividend income. Source: OECD Tax Database (www.oecd.org/ctp/taxdatabase). d. Tax burdens on individuals Average effective tax rates on most individuals have fallen much less than top statutory tax rates. Figure 4 compares the total tax wedge (income tax, employee and employer social security contributions combined) for a married couple with two children with just one earner on average earnings. The wedge between pre-tax earnings and take-home pay fell on average by 2.5 percentage points between 2000 and 2009, though there were much more marked falls in some countries. In recent years there has tended to be more emphasis on making work pay for low-income earners. Thus one driver of tax reform has been a desire to reduce disincentives for households to enter the labor market and once in the labor market to increase their work efforts. Following the example of the United States with its Earned Income Tax Credit (EITC), a number of OECD countries have introduced in-work tax credits to help make work pay for the low-skilled. The main objectives of such making work pay (MWP) policies are: 5
HUN FRA GRC BEL SWE FIN AUT TUR ITA GER SPA NOR NLD DNK POL UK PRT JPN SVK CZE CAN KOR SWI MEX AUS US IRL LUX ICL NZL To increase employment. This is done by reducing the costs of hiring low-productivity workers, or by increasing the incomes of those who accept low-paid work to make them more willing to take a job. To increase incomes of low income working families. Linking an increase in transfers to those with low incomes to their employment status appears sometimes to be politically more acceptable than untargeted transfers. The appeal of MWP policies spans political divides, and governments of both the right and left have introduced or extended such policies in recent years. The political attraction is that such policies appear to achieve both employment and distributional objectives at the same time, unlike some other alternative policies. That said, many OECD countries have not introduced such policies, or have followed alternative approaches, such as cuts in employers social security contributions. Figure 4. Average tax wedge for one-earner family with two children at average earnings 1, 2000 and 2009 2000 2009 50 45 40 OECD average tax wedge one-earner married couple at 100% AW with 2 children in 2009 (reduction of 2.5 pct. point since 2000) 35 30 25 20 15 10 5 0 1. The tax wedge is the sum of income tax plus employee and employer social security contributions paid less cash benefits received as a percentage of total labor costs (gross wage plus employer social security contributions). Source: OECD Taxing Wages (www.oecd.org/ctp/taxingwages). e. Tax Revenues The cuts in tax rates introduced by these reforms have not led to a fall in the overall tax burden (measured by the tax-to-gdp ratio) see figure 5 and table 1. Indeed, the overall trend in tax burdens was upward until 2000. A small number of countries notably Canada, Germany and the United Kingdom experienced a relatively stable tax burden. The unweighted OECD average peaked at 36.0 per cent in 2000 and did not reach similar levels again until 2007, in part reflecting the automatic effects on tax receipts of stronger economic growth. 6
One reason why revenues have been maintained despite cuts in income tax rates has been base-broadening measures such as aligning depreciation for tax purposes more closely with actual depreciation, or reductions in tax expenditures (i.e. tax reliefs for particular activities or groups of taxpayers that are in effect equivalent to public expenditure and thus have to be financed through higher taxes elsewhere). In many countries there has also been a switch to raising more receipts from broad-based consumption taxes - all OECD countries apart from the US now have a Value Added tax or General Sales Tax. Figure 5. Tax-to-GDP Ratios in the OECD-area, 1 1975-2008 55 OECD Total EU 15 United States Japan Germany France Sweden 50 45 40 35 30 25 20 1975 1980 1985 1990 1995 2000 2006 2007 2008 1. 2008 figures are lacking for some countries. Source: OECD (2009) Revenue Statistics 1965-2008 (www.oecd.org/ctp/revenuestats). A number of countries experienced large reductions in tax-to-gdp ratios between 2000 and 2008, as illustrated in Table 1. The United States, for example saw a reduction of 3.0 percentage points in its tax-to-gdp ratio, from 29.9 per cent to 26.9 per cent, contributing to a growing budget deficit. Substantial reductions of more than 2 percentage points were experienced in 7 other OECD countries: Canada (3.5 percentage points), Finland (4.4 percentage points), Greece (2.7 percentage points), Ireland (3.0 percentage points), the Netherlands (2.2 percentage points), the Slovak Republic (4.8 percentage points) and Sweden (4.7 percentage points). Two countries experienced an increase in the tax-to-gdp ratio of more than 3 percentage points over the period from 2000 to 2008: Mexico (+4.2 percentage points) and Korea (+4.0 percentage points). f. Summary table Table 2 provides further detail on the breakdown of tax receipts between types of tax and between tax rates in OECD countries, bringing together the latest cross-section data in one place. 7
Table 1. Total tax revenue as a percentage of GDP 1975 1985 1990 1995 2000 2006 2007 2008 Provisional Canada 32.0 32.5 35.9 35.6 35.6 33.5 33.3 32.2 Mexico 3 15.5 15.8 15.2 16.9 18.3 18.0 21.1 United States 25.6 25.6 27.3 27.9 29.9 28.2 28.3 26.9 Australia 25.9 28.3 28.5 28.8 31.1 30.6 30.8 n.a Japan 20.8 27.4 29.1 26.8 27.0 28.0 28.3 n.a Korea 14.5 15.7 18.1 18.6 22.6 25.0 26.5 26.6 New Zealand 28.7 31.3 37.4 36.6 33.6 36.6 35.7 34.5 Austria 1 36.6 40.8 39.7 41.4 43.2 41.8 42.3 42.9 Belgium 39.5 44.4 42.0 43.6 44.9 44.4 43.9 44.3 Czech Republic 37.5 35.3 37.1 37.4 36.6 Denmark 1 38.4 46.1 46.5 48.8 49.4 49.6 48.7 48.3 Finland 36.5 39.7 43.5 45.7 47.2 43.5 43.0 42.8 France 1 35.4 42.8 42.0 42.9 44.4 44.0 43.5 43.1 Germany 2 34.3 36.1 34.8 37.2 37.2 35.6 36.2 36.4 Greece 19.4 25.5 26.2 28.9 34.0 31.2 32.0 31.3 Hungary 41.3 38.0 37.1 39.5 40.1 Iceland 30.0 28.2 30.9 31.2 37.2 41.5 40.9 36.0 Ireland 28.8 34.7 33.1 32.5 31.3 31.7 30.8 28.3 Italy 25.4 33.6 37.8 40.1 42.3 42.3 43.5 43.2 Luxembourg 32.8 39.4 35.7 37.1 39.1 35.8 36.5 38.3 Netherlands 4 40.7 42.4 42.9 41.5 39.7 38.9 37.5 n.a Norway 39.2 42.6 41.0 40.9 42.6 44.0 43.6 42.1 Poland 36.2 32.8 34.0 34.9 n.a Portugal 19.7 25.2 27.7 32.1 34.1 35.5 36.4 36.5 Slovak Republic 34.1 29.4 29.4 29.3 Spain 1 18.4 27.6 32.5 32.1 34.2 36.7 37.2 33.0 Sweden 41.2 47.4 52.2 47.5 51.8 49.0 48.3 47.1 Switzerland 23.9 25.5 25.8 27.7 30.0 29.3 28.9 29.4 Turkey 11.9 11.5 14.9 16.8 24.2 24.5 23.7 23.5 United Kingdom 34.9 37.0 35.5 34.0 36.4 36.6 36.1 35.7 Unweighted average: OECD Total 29.4 32.6 33.7 34.7 36.0 35.8 35.8 n.a OECD America 28.8 24.5 26.3 26.2 27.5 26.7 26.5 26.7 OECD Pacific 22.5 25.7 28.3 27.7 28.6 30.0 30.4 n.a OECD Europe 30.9 35.3 36.0 37.1 38.4 38.0 38.0 n.a EU 19 32.1 37.5 38.1 38.9 39.4 38.6 38.8 n.a EU 15 32.1 37.5 38.1 39.0 40.6 39.8 39.7 n.a n.a indicates not available. Note: EU 15 area countries are : Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden and United Kingdom. EU 19 area countries is: EU 15 + plus Czech Republic, Hungary, Poland and Slovak Republic. 1. The total tax revenue has been reduced by the amount of the capital transfer that represents uncollected taxes. 2. Unified Germany beginning in 1991. Starting 2001, Germany has revised its treatment of non-wastable tax credits in the reporting of revenues to bring it into line with the OECD guidelines. The impact of this change is shown in Table D in Part I of this report. 3. Secretariat estimate, including expected revenues collected by state and local governments. 4. The year 2007 understates some local tax revenues. Source: OECD (2009) Revenue Statistics 1965-2008. 8
Table 2. Summary of comparative data: composition of tax receipts and comparisons of tax rates TAX / GDP % OF TOTAL TAX REVENUES Personal Corporate Income Tax Tax Social Security Contrib. Consumption Taxes Top Statutory Personal Income Tax Rate Top Corporate Income Tax Rate Average Effective Corporate Tax Rate Tax Wedge Top Rate on Dividends Standard VAT Rate 2008 provisional 2007 2007 2007 2007 2009 2010 2005 2009 2010 2009 Australia 30.8 (**) 36.7 23.1 0.0 26.6 46.5 30.0 26.2 26.7 46.5 10.0 Austria 42.9 22.5 5.8 33.7 27.6 50.0 25.0 21.9 47.9 43.8 20.0 Belgium 44.3 29.3 8.2 31.0 25.2 53.7 34.0 26.4 55.2 43.9 21.0 Canada 32.2 37.4 11.0 14.4 23.6 46.4 29.5 28.4 30.8 48.2 5.0 Czech Republic 36.6 11.6 13.4 43.5 29.8 15.0 19.0 -- 41.9 31.2 19.0 Denmark 48.3 51.7 7.4 2.0 33.6 51.6 25.0 -- 39.4 56.5 25.0 Finland 42.8 30.3 9.0 27.7 30.1 49.1 26.0 20.7 42.4 40.5 22.0 France 43.1 17.0 6.8 37.0 24.7 47.8 34.43 (#) 25.4 49.2 55.9 (#) 19.6 Germany 36.4 25.1 6.1 36.6 29.3 47.5 30.2 31.5 50.9 48.6 19.0 Greece 31.3 14.7 8.0 36.4 35.5 40.0 24.0 20.6 41.5 32.5 19.0 Hungary 40.1 18.2 7.0 32.7 37.7 36.0 19.0 -- 53.4 39.3 20.0 Iceland 36.0 33.9 6.1 7.7 40.4 37.2 15.0 (#) -- 28.3 23.5 (#) 24.5 Ireland 28.3 28.4 10.9 15.4 36.1 41.0 12.5 10.9 28.6 48.4 21.5 Italy 43.2 25.6 8.8 30.0 25.2 44.9 27.5 26.0 46.5 36.6 20.0 Japan 28.3 (**) 19.6 16.8 36.4 18.0 50.0 39.54 31.7 29.2 45.6 5.0 Korea 26.6 16.7 15.1 20.8 31.3 38.5 24.2 -- 19.7 47.8 10.0 Luxembourg 38.3 20.1 14.9 27.8 27.2 38.9 28.6 -- 34.0 42.5 15.0 Mexico 21.1 27.7 15.3 53.1 28.0 30.0 -- 15.3 30.0 15.0 Netherlands 37.5 (**) 20.4 8.7 36.2 29.9 52.0 25.5 (#) 25.1 38.0 44.125 (#) 19.0 New Zealand 34.5 42.1 14.2 0.0 31.7 38.0 30.0 -- 18.4 38.0 12.5 Norway 42.1 22.1 26.0 20.8 28.4 40.0 28.0 24.2 37.4 48.2 25.0 Poland 34.9 (**) 15.2 7.9 34.3 38.2 32.0 19.0 -- 34.0 34.4 22.0 Portugal 36.5 15.8 10.1 32.1 37.5 42.0 26.5 20.2 37.2 41.2 21.0 Slovak Republic 29.3 8.6 10.2 39.8 38.4 19.0 19.0 -- 37.6 19.0 19.0 Spain 33.0 19.8 12.4 32.6 25.5 43.0 30.0 26.1 38.2 42.6 16.0 Sweden 47.1 30.9 7.9 26.1 26.6 56.5 26.3 20.9 43.2 48.4 25.0 Switzerland 29.4 35.3 10.6 23.3 22.6 41.7 21.2 25.1 29.3 36.9 7.6 Turkey 23.5 17.0 6.8 21.7 47.7 35.6 20.0 -- 37.5 34.0 18.0 United Kingdom 35.7 30.1 9.4 18.4 29.2 40.0 28.0 23.9 32.5 54.0 15.0 United States 26.9 38.1 11.0 23.4 16.6 41.9 39.2 29.0 29.4 49.5 - OECD average 35.8 (**) 25.3 10.8 25.2 30.9 41.5 26.2 (#) -- 36.4 41.7 (#) 17.6 G7 average 35.1 (**) 27.6 10.0 28.0 23.8 45.5 32.6 (#) 28.0 38.4 48.3 (#) 13.9 EU15 average 39.7 (**) 25.5 9.0 28.2 29.5 46.5 26.9 (#) -- 41.6 45.3 (#) 19.9 NOTES - Tax wedge measure of the difference between labour costs to the employer and the corresponding net take-home pay of the employee, which is calculated by expressing the sum of personal income tax, employee plus employer social security contributions together with any payroll tax, minus benefits as a percentage of labour costs. Total labour costs are determined as gross wage earnings of employees plus employer social security contributions and payroll taxes (if any). The tax wedge is shown for single individuals at 100% of average earnings, 0 children (Source: Taxing Wages (OECD), 2008) - Top statutory personal these are the top statutory personal income tax rates (combined central and sub-central) (Source = OECD Tax Database) income tax rate - Top corporate tax rate This column shows the basic combined central and sub-central (statutory) corporate income tax rate given by the adjusted central government rate plus the sub-central rate (Source = OECD Tax Database). - Average effective Calculations based on a hypothetical investment for one period in plant and machinery, financed by equity or retained earnings. corporate tax rate Taxation at the shareholder level is not included. The expected rate of economic profits earned is 10%. Other assumptions: real discount rate: 10%, inflation rate: 3.5%, economic depreciation rate: 12.25%. Source: Institute for Fiscal Studies (IFS). - Tax as % of total tax Income categories in Revenue Statistics (OECD (2008)): Personal income taxes = 1100, corporate taxes = 1200, revenues Social security contributions = 2000, consumption taxes = 5000 - Top tax rate on reports effective statutory tax rates on distributions of domestic source income to a resident individual shareholder, dividends taking account of corporate income tax, personal income tax and any type of integration or relief to reduce the effects of double taxation of dividend income (Source: OECD Tax Database). ** 2007 final data; 2008 provisional data not available # 2009 data; in averages 2009 data for some countries 9
SOME CONCLUDING OBSERVATIONS Tax policies are currently being driven primarily by macroeconomic considerations notably to attenuate the impact of the sharp economic downturn precipitated by the financial crisis. Some countries, though, are now starting to take discretionary action to reduce their budget deficits. Thus over the last six months a number of countries (e.g. Ireland, Portugal, Spain and Greece) have announced increases in tax rates. Macroeconomic considerations will inevitably continue to play a major part in shaping tax policy in the next few years, as governments seek to restore sound public finances while enabling economic recovery to strengthen. Nevertheless, in some respects the importance of the structural aspects of tax policy has increased: Innovation, investment and entrepreneurship remain critical for the growth of potential / trend output; and thus for tax receipts and the affordable amount of public expenditure in the medium term. Tax policies that minimise the distortion of business and consumer decisions (including firms decisions whether to invest at home or abroad), while encouraging innovation remain essential. Scaling back ineffective and distortive tax expenditures (thus broadening the tax base) can avoid the need the need to raise tax rates (where achievable reductions in the share of public expenditure in GDP are inadequate to restore sound public finances and tax revenues have to be increased). Severe recessions can have long-lasting effects on trend output. Hysteresis effects in labour markets make it difficult to reduce long-term unemployment even in a recovery. Tax policies that support making work pay will continue to be important. The tax biases favouring leverage and capital gains over income in an environment of easy macroeconomic policies and lax financial regulation played some part in encouraging excessive risk taking in some sectors prior to the crisis. Reform could help support future financial stability and avoid a recurrence of the sort of costs (such as lost output due to the recession) currently being experienced. Market-based instruments, including taxation (and tradable emissions permits) provide a means of tackling environmental challenges such as the emission of greenhouse gases contributing to climate change at least resource cost; and with least damage to prospects for sustainable economic growth.. The international dimension to tax policy will remain critical. This can range from learning from other countries experience (e.g. under the auspices of the OECD) to addressing the increased need for cooperation between tax authorities in the design and implementation of tax policies to meet the challenges posed by globalization, tax competition and climate change. As in the area of trade, an internationally agreed set of rules of the game could help countries simultaneously to gain the full benefits of globalization, protect their tax bases and address environmental challenges. Stephen Matthews Bert Brys Centre for tax Policy and Administration, OECD 13 May 2010 10
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