Is There A Need For A Global Taxation Policy?

ABSTRACT:?

“Tax”, as we all know, is a contribution, by the citizens of a nation towards its economic development, out of their incomes earned from one or more sources. International taxation is deduction of direct and indirect tax from income of a person, earned outside his own country, by the government of his native country only.? A global taxation policy is a mechanism whereby incomes from trade in different parts of the world are taxed by countries, according to a single tax rate to encourage participation, accountability and responsibility-Participation in business, accountability towards governments, and responsibility towards the economies. Sustainability is the pivot around which the efforts of the world community revolve: a sustainable environment, sustainable political ties, sustainable military deals, sustainable nuclear partnerships, and likewise a sustainable global economy, so that the international goal of sustainable development is effectively achieved.?

KEYWORDS:?

Tax, International Taxation, Global Taxation Policy, Sustainable.?

INTRODUCTION:

“Taxation” means allocation, of a portion of income, of citizens of a nation/nations, by the concerned government/governments, towards numerous welfare-schemes, for economic progress of that nation/nations. For this, we citizens get our incomes “taxed”, i.e., reduced by a fixed minimum percentage, which thus becomes our contribution toward the economic growth of our nation. “International” is just a title given to a direct or indirect tax charged from a citizen by his own country, from income generated through a commercial activity carried on by him in a foreign country. However, off late, many countries have felt, and rather, increasingly, all are acknowledging, that there is a need for a world taxation order. There are large industries who run multiple chains (in several countries). They earn millions and billions through businesses abroad. To pay less as taxes, they attempt to get their incomes taxed in countries they are registered in, and not where their businesses boom, because the former’s taxation criteria may be lenient as compared to that of the latter. Global taxation policy is a globally agreeable/ agreed upon rate of tax, which will be levied against incomes of big traders who invest in many countries simultaneously, and profit manifold through several of their branches, so that all countries, developed or developing, can add a substantial value to their financial status.?

NECESSITY FOR A GLOBAL TAXATION POLICY

Taxation is needed to gather monetary support from citizens for?

1. economic upkeep of a nation?
2. updating the available human resource
3. funding schemes and projects for public welfare
4. encouraging operation of factories for the advancement of companies, growth of institutions and benefit of society.

Global taxation is necessary for all the above reasons. If an effective global taxation policy is prepared by countries in coordination with each other, then, materialized, it will:

1. enable traders to pay tax on their worldwide earnings by a tax rate, fixed internationally, to avoid tax-mismanagement and double taxation, which happen due to varying taxation norms of individual nations.??
2. prevent tax-evasion and lower tax-payment by traders making them pay tax by a tax rate, prescribed as one by all governments. Otherwise, traders manage to pay lower tax and escape paying higher tax, by transferring their Goodwill, a hen that lays golden eggs, from country of trade to country of headquarters.??
3. prevent countries from attracting investment by corporations with the help of low taxability rules, because this deprives other countries from revenue, when taxpayers, afraid of higher taxes, leave them and start their business in countries levying low tax rates.
4. enable businesses to give once and get manifold! This is because the relationship of Taxation and Commerce is such that the latter benefits more at the end of the process, from various angles:

??BUSINESSES=GOVERNMENTS=ECONOMIES=PEOPLES=BUSINESSES again.

Thus, when businesses pay taxes on their business generated incomes, they give to the governments of the countries where they function. The governments in return then utilize the funds so collected for numerous developmental plans and for capacity-building of banking institutions for lending when required, by people, companies, or in times of some nationwide emergency. The economy then nourishes demands of individuals for education, jobs, loans, etc. finally, this human capital works for the businesses, furthering their commercial interests and generate more profits. Also, taxes paid by Business to Government give benefit to Business in the form of better infrastructure, which the Government ensures for Business to continue functioning and investing, eventually enabling it to earn further, progress further. This is where Business gets from Government itself. Economy too gives back to Business; People also serve Business finally. Therefore, the ultimate beneficiary is Business.

IS THERE A GLOBAL TAXATION POLICY CURRENTLY?

Recently, in 2021, 136 countries have deliberated upon a strategy to deduct 15% of tax from the incomes of the corporate sector. OECD (Organization for Economic Cooperation and Development) has initiated this agreement; however, the target year is 2023, and in 2022, the nations have started thinking about how to bring the programme into action. The OECD estimates that the agreement will raise $150 billion a year globally from companies that have parked their operations in low-tax nations, avoiding a higher tax bill.

CONCLUSION:

Tax is a participation by earners in the well-being of their country, and if its nature becomes global, this gives them a chance to become contributors to world’s peace and prosperity (greatest happiness of greatest number, as Jeremy Bentham, a sociological jurist, talked about in his “A Fragment on Government” in 1776). Once in an article in an English newspaper, someone had mentioned about “Yaadhum Oore Yaavarum Kelir”. It was written there that it is a verse or a poem by a famous Tamil poet, Kaniyan Poongundranar, which means, that the entire world community belongs to us. Upon research, PM Modi’s UNGA speech came to light, where he cited this verse, for encouraging spirit of oneness among nations for international peace and security and growth. Thus, international taxation policy is an agenda of the world community to guarantee a stable financial health for all nations big or small and a sustainable development of corporations which encompasses a three-fold approach of participation, accountability and responsibility.?

SUGGESTIONS REGARDING IMPLEMENTATION OF THE 2023 GLOBAL TAXATION POLICY:

1. India gained popularity among nations because of the demonetization programme initiated by India’s Prime Minister Narendra Modi. This proves that India possesses the courage to do away with the menace of black money creation. The 2023 noble objective of OECD and 136 countries should not stop at the “deliberations” level. India should come forward at the global forum, to emphasize amongst the nations, citing, if necessary, ancient scriptures, verses of poems of famous poets, and so on, that we need to cooperate with each other and brush aside our personal enmities (if any) to attain the target of 15% tax reduction from incomes of corporates as soon as possible. The Chicago speech of Swami Vivekananda that started with “brothers and sisters of America” impressed one and all. India’s simplicity has an indelible mark on the minds of nations. It is my firm belief that all nations will duly acknowledge India’s advice.?
2. The names, email addresses, contact information of companies be registered on a global portal, while taxing their incomes by 15%. In future, a mail should be sent to all such companies, by this portal, thanking them for their contribution towards promotion of international welfare. This mail should be accompanied by a recorded voice message, applauding the efforts of the big organizations in understanding the need for mutual trust and cooperation between nations. Such vocal message, played out aloud in offices, will encourage employers and employees to strive for excellence and to better serve the world.?
3. Thirdly, if the countries deem it fit, they should create some form of incentive for the tax-payers, notifying on a portal, that which ever company pays 15% tax shall receive some for of benefit, for instance, a particular insurance scheme, some monetary concession, etc.?
4. Some global award be instituted for tax-paying companies, preferably in form of a trophy and a certificate, as a symbol of global recognition for paying taxes and being concerned for one’s nation and the world.

REFERENCES:

1. C.A. Kinjesh Thakkar, “Basic aspects of international Taxation and DTAA” (TaxGuru, 10 May 2020) https://taxguru.in/income-tax/basic-aspects-international-taxation-dtaa.html
2. Global Taxation-ICC-International Chamber of Commerce. https://iccwbo.org/global-issues-trends/competitive-markets/global-taxation/
3. T.C.A. Ramanujam; T.C.A. Sangeetha, “The global tax revolution” (The Hindu, 21 October 2021) www.thehindu.com?
4. David, “The Importance Of Taxes”, (RLK, 24 November, 2014) https://richardkleincpa.com/importance-of-taxes/?
5. Alan Rappeport, New York Times, “A global tax deal is at hand. Here’s how it would work.” (The Economic Times, 30 October 2021) https://economictimes.indiatimes.com/news/international/world-news/a-global-tax-deal-is-at-hand-heres-how-it-would-work/articleshow/87386671.cms
6. https://plato.stanford.edu/entries/bentham/#:~:text=In%20the%20Fragment%20Bentham%20stated,1977%2C%20393%2C%20440n%5D).
7. James E. Crimmins, “Jeremy Bentham” ( Stanford Encyclopedia of Philosophy, first published Tue Mar 17, 2015; revised on Wed Dec 8, 2021) https://plato.stanford.edu/entries/bentham/#:~:text=In%20the%20Fragment%20Bentham%20stated,1977%2C%20393%2C%20440n%5D).
8. https://www.indiatvnews.com/fyi/pm-modi-mentions-kaniyan-pungundranar-united-nations-general-assembly-552871