Good Governance in the Field of Taxation

Abstract

The current crisis draws attention to the problem of the tax systems and welfare state sustainability. Tax competition all around the world and aggressive tax planning techniques resulted in changes in tax systems, shifting the tax burden from capital to consumption or labour. Intensely tax-friendly states for businesses and individuals destroy the tax base of other countries. In 2013, the OECD, the United Nations, and the G20 and G7 called for changes. Their efforts aim to create the minimum standards of good governance in tax matters and therefore increase budget revenues. Currently, the European Union seems to have a common interest in promoting good governance in the taxation as well; which is defined as the principles of transparency, exchange of information and fair tax competition. However the distinction between “fair” and “unfair” tax competition is much easier in theory than in the practice. From 2015 onwards, the EU aims to introduce administrative cooperation including information exchange between tax authorities, as part of the intensified fight against tax evasion. Balancing the tax sovereignty of the individual countries with the legitimate protection of their tax revenues is an enormous challenge.
Motivated by the above facts, in this paper I will present the main characteristics of the efforts creating good governance in the field of taxation.
In the last part of the work an overview will be given about the Hungarian responses to these challenges and with the help of a survey I try to analyze the reactions of the economic actors.