As the OECD plublishes its review of tax policy across member states, Bill Dodwell, partner and head of tax policy at Deloitte, examines the impact of the OECD Base Erosion and Profit Shifting (BEPS) plan on multinationals
The OECD has just published its review of tax policy in the 34 OECD member states, together with Argentina and South Africa. Tax is going up. The overall tax burden in these higher income countries is at its highest level since 1965 – at 34.3% of GDP. Overall tax levels have increased since 2009, as countries have needed to rebuild public finances following the financial crisis. The UK’s tax level exceeds the OECD average: we started in 2015 at 36.3% of GDP and plan to increase this still further – to 37.3% by 2020.
The OECD has clear views on which tax policies damage economic growth. The report says ‘growth-oriented tax reforms have enhanced the investment climate by reducing taxes on businesses and lowered income tax burdens on individuals. This development is largely positive as corporate and labour income taxes, which have both been identified empirically as the most harmful to growth, are being reduced’.
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