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OECD Pushes Tax Reform To Address Wealth Disparity

by Ulrika Lomas, Tax-News.com, Brussels

08 June 2017


The OECD has called on governments to make changes to their tax regimes to support poverty-reduction.

In its new "Bridging the Gap" report, it said that tax systems should be redesigned to ensure that they support vulnerable people. It said that this means strengthening the progressivity of taxation through initiatives that should include introducing more equitable property taxes; strengthening inheritance and gift taxes; pursuing capital tax reforms to reduce rate differentials across assets; and bolstering global governance of tax policy.

The OECD warned that diminished progressivity in tax systems as well as increasing tax competition between jurisdictions is also putting additional pressure on public finances to fund social programs.

In recent years, countries have increasingly sought to compete by offering lower corporate income taxes to attract international investment. This has come alongside increases to value-added taxes and sin taxes, which are typically heavily regressive.

"We [as policymakers] have focused too much on markets and efficiency, and too little on people," said OECD Chief of Staff and G20 Sherpa Gabriela Ramos. "It is time to build people-centered growth."

In the OECD, the wealthiest one percent of taxpayers hold 19 percent of total wealth, while the bottom 40 percent holds three percent.

TAGS: tax | free trade agreement (FTA) | value added tax (VAT) | property tax | Organisation for Economic Co-operation and Development (OECD) | gift tax | G20 | tax reform | trade

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