Governments and world markets require a certain amount of tax revenue to function. While there are ongoing debates on the optimal overall level of taxation in any given jurisdiction, several incidents of this century, including the 2008 financial crisis and the recent COVID-19 pandemic, have raised public awareness surrounding the need for stable revenues. The United Nations Commission on Trade and Development (UNCTAD) estimated that in order to deliver the UN’s Sustainable Development Goals, an investment of between US$5-7tn would be needed annually from 2015 to 2030. This investment will need to come from multiple sources, and as jurisdictions emerge from a period of borrowing to fund the recovery, there is an emphasis on increased domestic resource mobilisation, especially in developing countries.
Who should pay tax, where and how much?
As well as the question of the overall size of the state, the ongoing debate about who pays, where, and how much also comes into play, with many commentators expressing concerns about growing inequality globally. As governments look to increase revenues to invest in a recovery, many stakeholders are suggesting that taxes should become more progressive with a wider base.
Possibilities for increasing these revenues fairly, and in the most efficient way, continue to be a theme explored throughout the KPMG Global Responsible Tax Program.
A related issue is the future of personal taxation in an environment of high labour mobility, potentially high capital-labour substitution, a significant portion of the workforce being able to work from anywhere, greater differential between highly skilled employees and those that are not, and people potentially moving in and out of the workforce for education and training.
Ongoing debate and dialogue are needed now more than ever when it comes to the societal impacts of tax.
Themes examined within the Societal impacts of Tax section include:
- Wealth taxes
- Inheritance taxes
- Taxing residential land and property
- Solidarity surcharges
- Increasing proportionality in income tax systems
- Aligning tax on capital with tax on income
- VAT and sales tax
- Excise tax on luxury goods
- The impact of green taxes
- Addressing avoidance and evasion
- Improving domestic resource mobilisation and stemming illicit financial flow from developing countries
- Shifting taxes from labour to capital