Tax incentives should be used to enable positive global outcomes

Tax incentives should be used to enable positive global outcomes, such as economic recovery from the pandemic and averting climate crisis, according to a report by accountancy bodies into the tax system.

ISLAMABAD ( Web News )

A survey of 8,000 people across the G20 countries and New Zealand concluded that two-thirds (66%) were strongly in favour of using the tax systems to help individuals and small businesses to recover following the effects of Covid-19.

They were also very much in favour of similar tax breaks to support efforts to tackle ‘global megatrends’, such as the fight against climate crisis and efforts to support retirement savings, with 66% believing these would be appropriate incentives.

Perhaps surprisingly, the survey, from the Association of Chartered Certified Accountants (ACCA) Chartered Accountants Australia and New Zealand (CA ANZ) and the International Federation of Accountants (IFAC) discovered that support had fallen in 15 of the 20 countries for international collaboration on tax.

This is despite the fact that 2021 has seen historic advances in international tax cooperation, including agreement by G7 countries to enforce a minimum rate of 15% corporation tax.

The Public Trust in Tax study, which was carried out in the first quarter of 2021, follows two previous reports on the subject in 2017 and 2019.

Other key findings included insight on whether taxpayers in different countries felt they were paying a ‘reasonable amount of tax’. Overall, most respondents were likely to agree that their tax rates were reasonable across all pay grades.

However, fewer than one in four respondents across the G20 countries stated that high income individuals paid a reasonable amount of tax in their country.

And while 33% believed that local companies were likely to be paying a reasonable amount of tax, in seven countries multinational corporations were thought to be paying too little tax.

Despite this suspicion, 49% of people overall were in favour of using tax incentives to attract multinational business. There was also a fall from 44% to 39% in the number supporting requirements to make multinational companies publish detailed tax information, although the vast majority still support MNCs sharing all their information with local tax authorities.