Thursday, March 26, 2009

UNCTAD blames deregulation, seeks code of conduct

The UN Conference on Trade and Development (UNCTAD) has issued a report ahead of next month's G20 summit saying what is by now well known: a sustained process of financial deregulation -- within countries and between countries -- led to an expanding cycle of optimism and risk-taking that is at the root of the current global crisis.

The 64-page report mentions the word "tax" only four times, but it does mention one especially interesting idea:

"To avoid the fight for market shares through manipulation of the exchange rate, wage rates, taxes or subsidies and to prevent financial markets from driving the competitive positions of nations into the wrong direction, a new code of conduct is needed regarding the overall competitiveness of nations. Such a code of conduct would have to balance the advantages of one country against the disadvantages of other directly or indirectly affected countries."

Now that makes sense. On the tax field, one is already being prepared for the UN. Read more here.


Blogger Henry said...

Surely tax competition is a good thing? May the best system win!

A corrupt country with a rotten infrastructure and school system will be an unattractive place to locate in. Countries which punish economic activity will also be unattractive. Countries with good infrastructure paid from from taxes which do not bear on economic activity will get the gravy.

A Scandinavian country using land value taxation instead of paying for its public services through labour-related taxes will beat all comers.

4:22 am  
Anonymous TJN said...

Henry. Tax competition a good thing? If you read what TJN writes, you would understand why yours is a bogus argument.

7:22 am  
Blogger Henry said...

Tax competition is generally harmful, for several reasons. It short-circuits democratic processes by which governments set their tax policies...

It results in the tax burden within countries being shifted away from corporate taxation in particular and towards other forms of tax whose burden falls disproportionately on the poor and the middle classes....

Weaker states such as in Africa are far less able to cope with the external pressures of tax competition...

It depends on the tax. Corporations cannot dodge land value taxation. They will of course oppose its introduction using any means they can, in particular by spreading a fog of confusion over the issue, aided and abetted by a body of economic theory which claims that land is not important. Corporations have most at stake because so much of their revenue stream consists of land rent, but that is why a move from present taxes to land value taxation is a key element in tax justice.

It is also the case that the burden of personal taxation falls mostly on the poor and middle classes, as must inevitably be so because the wealthiest are the most able to shift their bank balances around.

African countries above all need to get away from personal and corporate taxation because so much of their value consists of land and resources and a tax on these rental values will enable them to have good quality services and infrastructure - they should not be getting sucked out of those countries and into Swiss bank accounts.

Countries with land value taxation instead of existing taxation will be in a position to pay for physical capital out of their own resources instead of becoming enslaved to foreign financiers, for whom there will no longer be a place. Their so-called "investment" is just a process of grabbing the wealth created by other people's labour, and countries would be better off without them.

8:06 am  
Anonymous TJN said...

There is a place for land value tax. but as for "African countries above all need to get away from personal and corporate taxation"

are you serious?

8:13 am  

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