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The book Tax Inequality and Human Rights, published in 2019, thoroughly discussed the links between human rights and tax norms, regarding both policies and regulations. Basically, the new interest in the relationship between how human rights connects to tax policies on global and national levels are related to a development of growing wealth and income inequalities. The dominant growth promoting tax ideology on fiscal consolidation and neutrality, supported by powerful actors, have led to damaging consequences for social and economic sustainability. Tax reforms during the last decades have built tax systems with an outcome that are contradictory to the resource mobilization and redistribution that are necessary for the realization of human rights. It is obvious that Agenda 2030 demands a reset and a rebuild of fiscal systems that have the potential to combat poverty. This chapter will explore the fiscal sociology-based knowledge that we need in order to improve the substantive capacity of legal reforms to create inclusive societies.

Jämställdhet är utan tvekan en systembärande idé för rättvisa och hållbara skatter. Problemet är att många skattelagar, under rådande skatteideologi, bidragit till att befästa och fördjupa den ekonomiska ojämställdheten. Det är dessutom svårt att se en förändringspotential så länge som vetenskapliga förgivettaganden och försanthållanden om skatternas funktion i samhället utesluter principiella övervägande om relationen mellan skatterättvisa och jämställdhet. I den här krönikan är avsikten att visa på dolda jämställdhetsproblem i svensk skatterätt som vi i kontexten av kris och behovet av hållbara skattebaser inte längre kan ignorera. Den här krönikan  bygger till stor del på den forskning som bedrivits inom Horisont 2020-projektet Revisioning the ‘Fiscal EU’: Fair, Sustainable, and Coordinated Tax and Social Policies (FairTax).

In this comparative analysis of the UK and Sweden, we consider, if inherited wealth is most deserving of redistributive taxation, then what lessons, if any, may be learned from the difficult paths faced by this tax in these countries. We conclude that the political momentum behind the Swedish family business was distinct, and, possibly, capable of travel to the UK.

Sustainability has become the key principle for our future, and, in taxpolicy, sustainability has long been equal to the dominant concept of“taxing for economic growth.” However, the concept lacks an idea onjustice, tax justice as well as social justice, which inevitably leads to economicinequality gaps. New literature and empirical studies have contributedto a new awareness on how increasing inequalities can undermineeconomic growth. Based on the European situation, this Article arguesfor new perspectives on fair and sustainable taxation. Gender equality isone of these new perspectives. Why is explained in this Article.

The UK approach to interactions between HMRC and large businesses is incremental. The origins of co-operative compliance pre-date the merger between the former Inland Revenue and Her Majesty’s Customs and Excise to form HMRC, but were given impetus by the formation of the combined large business unit, now the Large Business Directorate.

Over the course of the last 13 years, a number of shifts have occurred including additional regulatory requirements and increased public scrutiny and political attention, all of which have influenced the trajectory of co-operative compliance regime. This study draws heavily on information provided by knowledgeable interviewees who shared their views with us during 2015, 16 and 17.

We find that initial enthusiasm for co-operative compliance was shared by both HMRC and large businesses for whom speedier processes and more collaborative working represented efficiency gains. The increased publicity around the tax affairs of large corporates and the performance of HMRC subsequent to 2012, however, precipitated a number of legislative and procedural changes that served to dampen the enthusiasm, particularly from the business point of view. These include the Senior Accounting Officer regime and the requirement to publish a Tax Strategy, the former concerned with the internal control processes of large corporates and the latter to trigger behavioural change through public exposure with reputational consequences.

2018 sees a recalibration of the risk review process that will facilitate reconsideration of the terms of engagement between large business and HMRC. We anticipate that co-operative compliance, like many regulatory initiatives, will continue to evolve in response to pressures both internal and external to HMRC, and that the role of technology will be both a blessing and a curse in the quest for continued collaboration.

This working paper presents the findings of a study of Co-operative Compliance in the Netherlands and the UK. These two countries were early adopters of Co-operative Compliance as a mechanism for managing the relationships between large business taxpayers and the tax authorities, mediated to various degrees by tax advisers. The juxtaposition of these two cases provides interesting insights into how policy initiatives come into being and evolve, as well as how regulators learn from each other in subtle, and not so subtle ways. Policy learning in this context is promoted by the intervention of the OECD as promulgator of best practices in tax administration.

Our focus is on Co-Operative Compliance in these two jurisdictions in practice. We examine how highly skilled actors perceive the programme in retrospect and prospect, by reference to their lived experiences derived from interviews. We also chart the emergence and subsequent adaptations of the programmes through the lens of official pronouncements and policy documents. The project started in 2013 and is generously funded by Horizon 2020. Over the course of the project, the objects of study were constantly moving within and between the countries we study, as was the backdrop of global events and developments in other jurisdictions. Capturing the essence of such a dynamic environment has been challenging but rewarding.

Sections 2 and 3 of this report provides a brief background to the project and an explanation of our methodology respectively. This is followed by descriptions of the working practices in both jurisdictions in Sections 4 and 5. Section 6 is the heart of the report that builds on the background provided in earlier Sections and presents the views of large businesses of various dimensions of Co-operative Compliance in both countries. In Section 7 we offer a discussion of our findings together with our conclusions.

The existing EU system of own resources financing EU expenditures does not make any positive contribution to the various EU strategies and policies implemented to cope with the manifold long-term challenges confronting the EU. It is against this background that the European Commission as well as the High Level Group on Own Resources, but also the European Parliament have (repeatedly) called for the introduction of tax-based own resources to partially substitute national contributions to the EU budget. Our specific contribution to this debate consists in the exploration of sustainability-oriented options for tax-based own resources which are able to support sustainable growth and development in the EU. Based on a concept of sustainability-oriented taxation in the context of own resources for the EU, we develop sustainability-oriented evaluation criteria to assess the suitability of specific candidates for tax-based own resources. We then present various options for tax-based own resources and estimations of their revenue potential. Moreover, a summary evaluation of these options based on our evaluation criteria is undertaken. Finally, we address implementation aspects. In particular, we briefly present and discuss potential models to implement tax-based own resources in the EU within the existing legal framework.

Key Findings

•  Understanding how co-operative compliance programmes — collaborations between tax administrations and corporations — have an impact demands a practice-based perspective.
• There is no single model of the co-operative compliance model that works universally.
• Designing and implementing a co-operative compliance programme ought to consider: whether a pilot is needed, fit with existing laws, the formality in agreements between corporations and tax administrations, voluntariness and inclusiveness respectively of participating corporations, points of contact and whether advance rulings are legally binding.
• Tax administrations designing, implementing and working with co-operative compliance programmes should carefully assess seven socio-cultural dimensions: existing tax culture, possibilities for evaluation, required competences, structural and organizational hindrances, resistance among stakeholders in the tax arena, trust and equality.

The design of tax systems has a considerable impact on the personal distribution of income and wealth at the household and the individual level, and due to the gender-differentiated socio-economic conditions also in a gender perspective. One of the most important areas of taxation is the taxation of personal incomes through the personal income tax. It directly influences the after-tax distribution of incomes from the various income sources. Besides the level of income tax rates and the design of the income tax schedule (progressive versus flat tax schedule), the system of household taxation (joint versus individual taxation), the determination of taxable income and the design of tax exemptions (tax allowances versus credits), particularly child-related ones, are crucial determinants in this respect. In addition to the gender-differentiated distributional impact, income tax systems may also have a gender-differentiated effect on work incentives and the distribution of paid and unpaid work between men and women. It is important to note that these gender-differentiated effects imply an implicit tax bias of income tax systems which results from different socio-economic conditions and behavioural patterns of women and men, while modern income tax systems do not include any tax provisions linked to gender and thus do not contain any explicit tax bias.

Against this background, the paper presents an overview of the microsimulation results for selected provisions of the personal income tax system done with EUROMOD for six selected Member States of the European Union (EU): Germany, Austria, Spain, Czech Republic, United Kingdom, and Sweden. These Member States were selected because they belong to different “families of taxation” with different traditions, institutional, historical and cultural factors and developments, and different religious and partisan influences shaping the evolution of (personal income) tax systems.

Overall, our simulations show that the design of income tax schedules, systems of household taxation and (tax-related) child benefits has non-negligible effects on income distribution as well as work incentives in general and particularly from a gender perspective for the six EU Member States considered. Although the effects differ across countries, particularly on the level of household types, depending on the concrete design of the tax benefit system and the interactions between tax and benefit provisions, some general tendencies and effects can be identified.

Firstly, the introduction of a flat tax hardly impacts the simulated poverty risk, but increases income inequality. Gender-differentiated effects are less clear-cut, and their extent differs across countries. However, generally a flat tax benefits couple households with a male active income contributor, while households with female active income contributors lose. Rather pronounced gender differences can also be found between active lone mothers and fathers. While in almost all countries active lone mothers lose from the introduction of a flat tax, active lone fathers are winners.

Secondly, replacing individual taxation by a joint taxation system with income splitting has small effects on the poverty risk only, but decreases income inequality in all countries analysed. The introduction of joint taxation with income splitting benefits couple households with one active income contributor in almost all countries included, regardless of the existence of children and of the gender of the active income contributor. Gender-differentiated effects are almost non-existent in childless couple households with one active income contributor. They are a little more pronounced if there are children in the household, due to income differences between spouses.

Thirdly, our simulations show that the various child benefits have the expected overall distributional effects. Replacing an existing child benefit granted as cash transfer by tax-related child benefits raises the poverty risk and income inequality. Moreover, the inequality- and poverty-increasing effect of a child tax allowance is estimated to be higher compared to that of a child tax credit. Gender-differentiated effects are not clear-cut and require deeper analyses.

Overall, one central result of our analyses is that the extent of gender differences in the effects of the various simulation scenarios differs markedly across the countries included. It remains to be explored, in a next step, to what extent these cross-country differences in the gender-differentiated impact of policy measures are associated with the prevailing welfare state / family of taxation types.