Clearly, rapidly shifting social norms are having a significant impact on tax authorities and tax payers alike. Today, society is keenly aware of the importance of tax within their national economies and there is a growing sense that taxes must be shouldered collectively.
At the same time, tax authorities have been making material changes to their regimes, in some cases to increase taxes on high-income earners, in other cases on corporations.
Having reflected on the challenges raised during Hub 1, the panel identified a number of areas where tax authorities and payers may focus to start rebuilding trust with the public. Chris Hegarty, for example, asserted that taxpayers needed to become more transparent about the amounts of tax that they pay within each jurisdiction on a fully consolidated basis.
Gillian Tett, on the other hand, suggested that better education and communication between tax professionals and the media would help the tax community rebuild public trust. For one, this would help journalists understand the complex issues that are unfolding every day. In turn, this will further educate the public as to what the key issues really mean.
The panel was asked to consider whether it is reasonable to use taxes from one country to bail out another. In response, Nicos Christodoulakis suggested that these types of trade-offs underwrite the idea of an economic union and, as such, the real question should be what the money is used for and how it is allocated.
In discussing the changing role of the tax director, Martin Wenz noted that managing reputational risk has quickly become a key responsibility of the tax director which, in turn, has led to far less aggressive corporate tax planning strategies as tax leaders start to balance tax savings against the potential impact on public opinion.
The panel then went on to discuss a number of central questions such as whether aggressive tax planning is a thing of the past given today’s societal norms; if tax directors needed to communicate their tax positions more clearly to stakeholders and the general public; and at what point tax rates become immoral (either by being set too high or too low).