Restoring Trust in the ‘Fairness’ of Corporate Taxation: Increased Transparency and the Need for Institutional Reform

From S. Goslinga, et al (Eds.) Tax and Trust Institutions, Interactions and Instruments The Hague: Eleven International Publishing 2018. Reproduced here with the kind permission of the publishers.

21 Pages Posted: 13 Jun 2019

See all articles by Judith Freedman

Judith Freedman

University of Oxford - Faculty of Law; Oxford University Centre for Business Taxation

Date Written: November 30, 2018

Abstract

This paper examines the relationship between trust and transparency in the context of corporate taxation. Transparency will not always increase trust and might even undermine it. Sometimes this loss of trust will be deserved and might help to bring about change that is needed, but at other times transparency can lead to misunderstanding and inability to absorb or utilize the information that is being made available, with a consequential unjustified and unfortunate loss of trust. In such cases, increased transparency can actually lower tax morale and the willingness of taxpayers to pay their taxes voluntarily, with little or no corresponding benefit. The pressure for increased transparency to the public in the tax world arises largely from lack of trust not only in large multinational companies (MNCs) but also in governments, institutions generally and tax authorities in particular. This widespread lack of trust in our tax system needs to be addressed through improved institutions and fundamental reform. Ultimately it is essential for trust to be restored in governments and tax authorities to design, impose and administer taxes on businesses in a way that the public perceive to be procedurally and administratively fair, whatever system is ultimately chosen for this purpose. It is institutional reform rather than increasingly detailed information in the public domain that is needed to achieve this. This is not anti- democratic – there should be debate and input – but democracies also need well- functioning, trustworthy and trusted institutions to serve them.

Keywords: Tax, trust, transparency, institutions

Suggested Citation

Freedman, Judith, Restoring Trust in the ‘Fairness’ of Corporate Taxation: Increased Transparency and the Need for Institutional Reform (November 30, 2018). From S. Goslinga, et al (Eds.) Tax and Trust Institutions, Interactions and Instruments The Hague: Eleven International Publishing 2018. Reproduced here with the kind permission of the publishers. , Available at SSRN: https://ssrn.com/abstract=3396775 or http://dx.doi.org/10.2139/ssrn.3396775

Judith Freedman (Contact Author)

University of Oxford - Faculty of Law ( email )

Worcester College
Walton Street
Oxford, Oxfordshire OX1 2HB
Great Britain

Oxford University Centre for Business Taxation ( email )

Said Business School
Oxford, Oxfordshire OX1
United Kingdom

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