Tax and Inequality

I left Delhi Saturday night thinking of the dozens of “tuk tuk tuks” I saw every day on the way to the Conference Center. I thought about all the treasures that make this Indian city unique in so many ways. I thought about the savory lunches and dinners that were offered by our host. And I thought, what message was I taking away from this 4th International Tax Dialogue (ITD) Global Conference on “Tax and Inequality.” One thing I was certain of; our hosts were extremely gracious. Sadly, I’m far from being a gourmet and possibly did not fully partake of the fine cuisine presented to us.

Ten Thousand meters above Asia I reflected upon the theme of the Conference, “Tax and Inequality.” At first these two words appear contradictory. How can there be tax and equality at the same time? Someone is sure to get the short end of the stick! But the three days of discussions raised some interesting issues. Several papers were electronically distributed prior to the meeting that addressed taxation and inequality in a context I hadn’t considered before. For example, the three-day session addressed issues dealing with tax policy and its impact on the social classes as a result of direct and indirect taxes. The novelty of these discussions was that these issues were being brought forward in the current economic environment. So, with a good part of the world facing economic problems, the points made by the speakers and audience were as timely as time can get. What grabbed my attention was that tax administrations from developing nations were facing similar issues regardless of what hemisphere they came from. And to some extent, the same holds true for countries North or South of the equator, be they developed or developing nations.

Without getting into all the agenda details (these can be found at ITDWEB.ORG), I can mention that we discussed subjects dealing with inequality in regards to wealth and poverty, forms of government, and gender and age of taxpayers.

I can’t tell you if solutions were made available to participants on issues dealing with inequality in taxation since as its name implies, the International Tax Dialogue is just that, a dialogue, a forum, an opportunity to discuss and ponder over pressing issues in the field of taxation. And for me that was accomplished. It opened my mind to consider issues on the above mentioned matters when dealing with taxation. I think I’m far from having an answer to everyone’s concerns when it comes to inequality and taxation but thankfully today I’m a bit more aware of social issues being experienced worldwide when it comes to taxation.

Ironically, I do bring home one message and it’s not too related to the theme of the Conference. That message is that, if tax administrations want to be equitable with all taxpayers and promote equality in their countries, they need to focus on the basics: assist taxpayers in complying with their tax responsibilities and enforce the law with integrity and fairness to all. If this could be done in an efficient manner, yet the better. Of paramount importance here is the tax administration’s effectiveness. If it does not tax the informal economy it is promoting inequality. If it does not address tax issues that are permitting millions of dollars to drain out of their national treasuries, it is promoting inequality. If it turns a blind-eye in face of possible corruption of its officials, it is promoting inequality. If it’s permitting the rich to get illegally richer while the poor pay more in consumption taxes, the tax administration is promoting inequality.

Even as a taxpayer, I need to ask myself, “Do I promote tax equality in my country?”

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