Last year you visited 16 countries across four continents. How, if at all, have your views on tax changed as a result?
The most significant impact was realising the importance of tax administration, and the need to take a holistic approach to taxation: what I have since designated as tax policy/administration symbiosis. Before this, I tended to consider tax administration as a post-policy consideration; administration implemented policy. What I have realised, however, is that policy must be designed in light of administrative feasibility. Tax administration must dictate tax policy, the same way as tax policy dictates tax administration.
You are to be part of a multi-disciplinary research team, led by Universidad Complutense de Madrid, which will look at the societal consequences of robotics. What are your immediate thoughts on the implications for tax policy?
In terms of taxation, our instinct is that the implications will happen at two different moments: first, as businesses adapt to the age of interactive robotics; and second, as interactive robots progressively substitute human workers in a range of industries. At the first stage, there will be implications in terms of workers’ training, R&D incentives, and other relatively specific areas of the tax system. In the second stage, the implications will become more fundamental. How to offset a potential decrease in personal income tax and social security revenues is a key issue; but some of the foundational principles of tax sovereignty, such as the benefits principle or ability to pay principle, may also have to be reframed.
When testifying before the PAC on online tax fraud, you expressed concern about trends on tax enforcement across Europe. Why the concern?
I think that in the mist of public finance concerns, we have made a fundamental mistake on tax enforcement: we have equated tax fraud to revenue loss, and thus combating tax fraud to combating revenue lost through fraud. Tax fraud carries significant costs, of which revenue loss is just one of them: it distorts the market, creating an unequal playing field; it increases tax inequity, threatening social cohesion; and, in some cases, it provides a subsidy to organised crime. In many cases, combating revenue loss will have a knock-down effect on other costs of fraud, but this will not always be the case. Tax amnesties or lack of prosecution for tax fraud, for example, may have a positive effect on combating the revenue costs of fraud, as part of the revenue will be recovered, but not only will they not address the other costs of fraud, but they may increase them. Concentrating on the revenue costs of fraud rather than the fraud itself leads to selective tax enforcement, which in turn represents a serious risk to the rule of law.
What do you know now that you wished you’d known at the start of your career?
I wish I had known how important, and rewarding, professional networks are. In the beginning of my career in practice, I was so shy that, after having done all the written work, I used to ask my colleagues to call clients on my behalf. Becoming an academic, and teaching in particular, helped me overcome this shyness, and today I find that establishing personal relations – meeting people from a variety of backgrounds, making tax friends throughout the world – is one of the most rewarding aspects of my professional life.
You might not know this about me…
Whilst I also enjoy literature, cinema, history and politics, I relax the most by watching science programmes or reading science books, particularly on astronomy, physics, evolutionary biology and, more recently, neuroscience. Being reminded of my own insignificance helps me to put daily pressures – and tax – into perspective.
Last year you visited 16 countries across four continents. How, if at all, have your views on tax changed as a result?
The most significant impact was realising the importance of tax administration, and the need to take a holistic approach to taxation: what I have since designated as tax policy/administration symbiosis. Before this, I tended to consider tax administration as a post-policy consideration; administration implemented policy. What I have realised, however, is that policy must be designed in light of administrative feasibility. Tax administration must dictate tax policy, the same way as tax policy dictates tax administration.
You are to be part of a multi-disciplinary research team, led by Universidad Complutense de Madrid, which will look at the societal consequences of robotics. What are your immediate thoughts on the implications for tax policy?
In terms of taxation, our instinct is that the implications will happen at two different moments: first, as businesses adapt to the age of interactive robotics; and second, as interactive robots progressively substitute human workers in a range of industries. At the first stage, there will be implications in terms of workers’ training, R&D incentives, and other relatively specific areas of the tax system. In the second stage, the implications will become more fundamental. How to offset a potential decrease in personal income tax and social security revenues is a key issue; but some of the foundational principles of tax sovereignty, such as the benefits principle or ability to pay principle, may also have to be reframed.
When testifying before the PAC on online tax fraud, you expressed concern about trends on tax enforcement across Europe. Why the concern?
I think that in the mist of public finance concerns, we have made a fundamental mistake on tax enforcement: we have equated tax fraud to revenue loss, and thus combating tax fraud to combating revenue lost through fraud. Tax fraud carries significant costs, of which revenue loss is just one of them: it distorts the market, creating an unequal playing field; it increases tax inequity, threatening social cohesion; and, in some cases, it provides a subsidy to organised crime. In many cases, combating revenue loss will have a knock-down effect on other costs of fraud, but this will not always be the case. Tax amnesties or lack of prosecution for tax fraud, for example, may have a positive effect on combating the revenue costs of fraud, as part of the revenue will be recovered, but not only will they not address the other costs of fraud, but they may increase them. Concentrating on the revenue costs of fraud rather than the fraud itself leads to selective tax enforcement, which in turn represents a serious risk to the rule of law.
What do you know now that you wished you’d known at the start of your career?
I wish I had known how important, and rewarding, professional networks are. In the beginning of my career in practice, I was so shy that, after having done all the written work, I used to ask my colleagues to call clients on my behalf. Becoming an academic, and teaching in particular, helped me overcome this shyness, and today I find that establishing personal relations – meeting people from a variety of backgrounds, making tax friends throughout the world – is one of the most rewarding aspects of my professional life.
You might not know this about me…
Whilst I also enjoy literature, cinema, history and politics, I relax the most by watching science programmes or reading science books, particularly on astronomy, physics, evolutionary biology and, more recently, neuroscience. Being reminded of my own insignificance helps me to put daily pressures – and tax – into perspective.
