One minute with Jeffrey Owens, director of WU Global Tax Policy Center.
How did you end up in tax?
By accident: I started as an accountant, moved on to law and economics, and drifted into tax.
Who in tax do you most admire?
I admire different people for different reasons: Richard Bird as one of the long time gurus of the public finance academics, Mike Keen of the IMF for the way he has bridged the world of academia and international organisations, Will Morris for his efforts to get a serious dialogue between NGOs and tax professionals, and Pascal Saint-Amans for pushing the G20 beyond HNWI.
What advice would give to someone entering the profession?
Given the current political debate over tax and MNES, make sure you have thick skin, media training and interests outside of tax. More seriously, try to move between the private and public sectors since this will enable you to get both perspectives on the major tax issues. Once you lose your intellectual curiosity, hang up your tax boots.
What work is keeping you busy?
In 2012, I stepped down from heading up the OECD tax work and found myself moving from having one job to four: a mix of academic, business and government. I see this as a continuation of my efforts at the OECD to build bridges between the different communities that have a stake in the tax work and to develop a spirit of cooperation.
Is there a recent development in tax that concerns you?
The polarisation of the debate over the taxation of MNEs. Yes, there are certainly some MNEs that push the envelope on tax planning, but I think most, especially non-US MNEs, want to comply with both the spirit and letter of the law. We need changes in the international rules of the game, but more a repair than replace. We will end up with new stable rules only if we have a good dialogue between governments and business, and if all major countries agree not only on what the new rules should be but also apply them in a consistent fashion.
Is there a common tax problem you come across time and again in tax?
Complexity in tax laws is inevitable in some ways becasue complex economies require complex laws, but it we could develop more widely what the OECD calls "cooperative compliance" maybe we would find scope to simplify our anti-abuse provisions and move towards legislation based upon broad principles rather than detailed, prescriptive rules. I also think we have lost the plot on transfer pricing.
A highlight in your career?
I have been very fortunate in leading the OECD at a time when tax was moving up the political agenda and when many new ideas and concepts were being discussed. The highlight was participating in the G20 London summit in 2009, which ushered in the new era of tax transparency and showed G20 leaders that the OECD could contribute to their broader agenda.
Should corporates be more transparent on tax issues?
Any company that doesn’t embrace the concept of transparency ain’t reading the tea leaves. This is the concept that companies are going to be increasingly judged by, whether in the tax area, money laundering or corporate governance. We live in an era where tax planning is going to be judged by the court of public opinion. Corporates should assume that their tax arrangements will be subject to a public debate: an informed public debate, not a one-sided inquisition. We will see the EITI extended beyond the extractive industries sector (in EU banking, it is already there) and we will see governments pushing the concept of country by country reporting (now that unitary tax is off the immediate political agenda). MNEs should be more relaxed about this. Companies, particularly US companies, should get ahead of the curve and engage in the debate so that they can shape the outcomes.
What more could be done to improve offshore compliance?
In dealing with offshore non-compliance, we have made more progress in the last five years than in the previous 50 years. Today, it is hard to imagine how (and why) so many governments were prepared to turn a blind eye to the way that their residents used tax havens to avoid paying taxes. There are many reasons why their attitudes changed: the need for revenues, the desire to show their citizens that the burden of tax was being fairly shared, and it became good politics to be seen as being tough on evaders especially at a time when you are moving away from progressive tax systems and halving your corporation tax. Some suggest that this is a passing phase and in five to eight years we will move back to the old ways. I don’t agree: we have seen a sea change and tax transparency is now too deeply embedded in our tax cultures to be turned back.
If you could make one change to UK tax law, what would it be?
I regret the way we are moving away from taxing immovable property. Some countries have abandoned their traditional property taxes, others have hollowed out their taxes at death; many countries have failed to develop an overall policy towards the way they go about taxing land and buildings. We need to reassess how governments can use such taxes, both to provide fiscal autonomy to local administations and to contribute to reducing growing inequalities in the distribution of wealth.
Where do you stand on the GAAR and HMRC’s GAAR guidance?
It evens up the balance of power between tax administrations and taxpayers, and recognises that in today’s complex environment legislation is never going to be so clear that it cannot be misused. GAARs create uncertainty for taxpayers, but that's the intention, at least for those that adopt a strict, narrow interpretation of the legislation and make no attempt to understand the intention. I think the UK GAAR gets the right balance, with its double reasonable test and its focus on abusive transactions.
What, if anything, can the UK tax authority learn from its overseas counterparts?
Every tax administration can learn something from counterparts in other countries, and today it's never been easier. Since the mid-2000s, the OECD has provided a forum, the FTA, in which Commissioners meet regularly to exchange experiences. It not only enables them to identify best practices, but also empowers them to speak with one voice. When 43 Commissioners say they intend to take action against non-compliance, or when they agree on a way to deal with SMEs, then the business community takes note. I think this process should go further, with the FTA trying to develop measures that would benchmark the performance of tax administration and the compliance burden placed upon business: both SMEs and MNEs. They would do a much better job than what's currently available.
What have you learned from 40 years of working with governments from around the globe?
First, I would never want to be a Commissioner: it is the loneliest job in town. Second, you need to have a sense of humour to work on tax. Third, you can’t be in tax just for the money: you’ve got to feel that you are making a contribution to society, whether it’s improving the growth prospects of your country, achieving a fairer society or a better environment. That’s where the satisfaction comes from.
One minute with Jeffrey Owens, director of WU Global Tax Policy Center.
How did you end up in tax?
By accident: I started as an accountant, moved on to law and economics, and drifted into tax.
Who in tax do you most admire?
I admire different people for different reasons: Richard Bird as one of the long time gurus of the public finance academics, Mike Keen of the IMF for the way he has bridged the world of academia and international organisations, Will Morris for his efforts to get a serious dialogue between NGOs and tax professionals, and Pascal Saint-Amans for pushing the G20 beyond HNWI.
What advice would give to someone entering the profession?
Given the current political debate over tax and MNES, make sure you have thick skin, media training and interests outside of tax. More seriously, try to move between the private and public sectors since this will enable you to get both perspectives on the major tax issues. Once you lose your intellectual curiosity, hang up your tax boots.
What work is keeping you busy?
In 2012, I stepped down from heading up the OECD tax work and found myself moving from having one job to four: a mix of academic, business and government. I see this as a continuation of my efforts at the OECD to build bridges between the different communities that have a stake in the tax work and to develop a spirit of cooperation.
Is there a recent development in tax that concerns you?
The polarisation of the debate over the taxation of MNEs. Yes, there are certainly some MNEs that push the envelope on tax planning, but I think most, especially non-US MNEs, want to comply with both the spirit and letter of the law. We need changes in the international rules of the game, but more a repair than replace. We will end up with new stable rules only if we have a good dialogue between governments and business, and if all major countries agree not only on what the new rules should be but also apply them in a consistent fashion.
Is there a common tax problem you come across time and again in tax?
Complexity in tax laws is inevitable in some ways becasue complex economies require complex laws, but it we could develop more widely what the OECD calls "cooperative compliance" maybe we would find scope to simplify our anti-abuse provisions and move towards legislation based upon broad principles rather than detailed, prescriptive rules. I also think we have lost the plot on transfer pricing.
A highlight in your career?
I have been very fortunate in leading the OECD at a time when tax was moving up the political agenda and when many new ideas and concepts were being discussed. The highlight was participating in the G20 London summit in 2009, which ushered in the new era of tax transparency and showed G20 leaders that the OECD could contribute to their broader agenda.
Should corporates be more transparent on tax issues?
Any company that doesn’t embrace the concept of transparency ain’t reading the tea leaves. This is the concept that companies are going to be increasingly judged by, whether in the tax area, money laundering or corporate governance. We live in an era where tax planning is going to be judged by the court of public opinion. Corporates should assume that their tax arrangements will be subject to a public debate: an informed public debate, not a one-sided inquisition. We will see the EITI extended beyond the extractive industries sector (in EU banking, it is already there) and we will see governments pushing the concept of country by country reporting (now that unitary tax is off the immediate political agenda). MNEs should be more relaxed about this. Companies, particularly US companies, should get ahead of the curve and engage in the debate so that they can shape the outcomes.
What more could be done to improve offshore compliance?
In dealing with offshore non-compliance, we have made more progress in the last five years than in the previous 50 years. Today, it is hard to imagine how (and why) so many governments were prepared to turn a blind eye to the way that their residents used tax havens to avoid paying taxes. There are many reasons why their attitudes changed: the need for revenues, the desire to show their citizens that the burden of tax was being fairly shared, and it became good politics to be seen as being tough on evaders especially at a time when you are moving away from progressive tax systems and halving your corporation tax. Some suggest that this is a passing phase and in five to eight years we will move back to the old ways. I don’t agree: we have seen a sea change and tax transparency is now too deeply embedded in our tax cultures to be turned back.
If you could make one change to UK tax law, what would it be?
I regret the way we are moving away from taxing immovable property. Some countries have abandoned their traditional property taxes, others have hollowed out their taxes at death; many countries have failed to develop an overall policy towards the way they go about taxing land and buildings. We need to reassess how governments can use such taxes, both to provide fiscal autonomy to local administations and to contribute to reducing growing inequalities in the distribution of wealth.
Where do you stand on the GAAR and HMRC’s GAAR guidance?
It evens up the balance of power between tax administrations and taxpayers, and recognises that in today’s complex environment legislation is never going to be so clear that it cannot be misused. GAARs create uncertainty for taxpayers, but that's the intention, at least for those that adopt a strict, narrow interpretation of the legislation and make no attempt to understand the intention. I think the UK GAAR gets the right balance, with its double reasonable test and its focus on abusive transactions.
What, if anything, can the UK tax authority learn from its overseas counterparts?
Every tax administration can learn something from counterparts in other countries, and today it's never been easier. Since the mid-2000s, the OECD has provided a forum, the FTA, in which Commissioners meet regularly to exchange experiences. It not only enables them to identify best practices, but also empowers them to speak with one voice. When 43 Commissioners say they intend to take action against non-compliance, or when they agree on a way to deal with SMEs, then the business community takes note. I think this process should go further, with the FTA trying to develop measures that would benchmark the performance of tax administration and the compliance burden placed upon business: both SMEs and MNEs. They would do a much better job than what's currently available.
What have you learned from 40 years of working with governments from around the globe?
First, I would never want to be a Commissioner: it is the loneliest job in town. Second, you need to have a sense of humour to work on tax. Third, you can’t be in tax just for the money: you’ve got to feel that you are making a contribution to society, whether it’s improving the growth prospects of your country, achieving a fairer society or a better environment. That’s where the satisfaction comes from.
