Public Trust in Tax, how to enhance the effectiveness, sustainability and fairness of global tax systems?

Public trust is vital to the effectiveness and sustainability of any tax system. It’s central to tax morale, which is the tendency for individuals and businesses to pay their tax voluntarily without intervention by tax authorities. Understanding how the tax system is perceived, and what taxpayers want from it, is therefore key to designing and operating systems which earn that trust.

It is with this in mind that IFAC (International Federation of Accountants), ACCA (The Association of Chartered Certified Accountants), and CA ANZ (Chartered Accountants Australia & New Zealand), in collaboration with the OECD, organised a lively panel discussion with renowned experts at the launch of the 2021 edition of Public Trust in tax, focusing on how to enhance the effectiveness, sustainability and fairness of global tax systems. It was followed by over 500 participants from all over the globe.

After a welcome speech by ACCA’s Chief Executive Helen Brand, and a keynote speech from Paul Tang, MEP and Chair of the European Parliament FISC Committee, the panel discussion, moderated by Stephanie Soong Johnston, Chief correspondent for Tax Notes Today International , welcomed Grace Perez-Navarro, Deputy Director of the OECD's Centre for Tax Policy and Administration; Reinhard Biebel, Head of unit, Direct Tax Policy and Cooperation, DG TAXUD, European Commission; Chiara Putaturo, EU Inequality and Tax Policy Advisor, Oxfam EU office and Albert Baker, Deloitte Global Leader, Tax Policy. After a video message from Ainslie von Onselen, CEO of CA ANZ, concluding remarks were delivered by Kevin Dancey, CEO of IFAC.

The panelists agreed that fighting tax avoidance and evasion is a key element to create trust in the system. That starts with coordination of legislative actions in order to not create new loopholes. It was common ground that tax is a challenging area for legislators – tax regimes are called upon to achieve many objectives, encourage certain sectors and behaviours and discourage other sectors and behaviours, which inherently leads to complexity. That in turn can make it even more challenging for citizens to see that the overall shape of the system is appropriate and fit for purpose.

Helen Brand, OBE, Chief Executive of ACCA said ‘our joint survey shows that professional tax accountants have the highest level of trust, and that accountants are also seen to contribute to the efficiency of the tax systems by making them more efficient, effective and fair. As the chief executive of a global professional accountancy body, I’m proud to see these results. But there is no room for complacency, and we will continue to engage with key stakeholders - including the younger generation - to support financial education and drive trust in tax and trust in the profession, in the public interest’.

The recent OECD publication Ending the Shell Game: Cracking down on the Professionals who enable Tax and White Collar Crimes shows the importance of law enforcement and professional bodies working together to combat professional enablers of tax crimes and increase public confidence in the financial system.

Ainslie van Onselen, CEO of CA ANZ added: ‘Well-functioning tax systems and high levels of taxpayer trust and confidence are vital, especially in challenging times when tough decisions are necessary. Accountants will continue to need guidance and support from their professional associations, not just with training and professional development, but in setting clear standards for ethical behaviours.CA ANZ, IFAC and ACCA will continue to look for ways to collaborate, not only to get the best outcome possible for stakeholders in the tax system, but to constantly spotlight the vital role accountants play as good citizens in helping design, implement and navigate tax laws, which support community, national and, dare I say, global goals’.

The importance of addressing every aspect of the tax system, both what it does and how it does it, came through clearly. Some speakers called for a more progressive tax system, as well as more tax transparency on tax incentives and on companies' country by country reports. There were also calls for clarity of laws, regulations and treaties; effective and efficient dispute resolution mechanisms; and well-resourced tax administrations to encourage compliance and enforce the law in a consistent manner.

Already a rising concern even before the pandemic, the role of taxation in the context of the greening of the economy could play a critical role in the post-COVID recovery. But even in the new Covid-affected world, the old challenge that taxes designed to change behaviour will, if they’re effective, end up eroding their own base has to be addressed.

Kevin Dancey, CEO of IFAC concluded: ‘At IFAC, and through PAOs like ACCA and CA ANZ, we’ll continue to do our part to enhance the effectiveness of the system and support professional accountants in their tax advisory roles. Professional Accountancy Organisations are key. They can set the direction and equip their members, whether they are in government, business or public practice. They can support members, grounded in the Profession’s International Code of Ethics, in delivering their public interest mandate and doing the right thing’.