The OECD base erosion and profit shifting initiative, aimed at closing tax avoidance gaps in the international system, is meant to be inclusive. Today roughly two-thirds of the initiative’s members are emerging economies. Yet, as discussions expand to questions regarding who gets to tax what in the digital economy, it is becoming clear that the OECD is an unlikely forum for the task. Instead, institutions like the World Bank or the International Monetary Fund are the obvious conveners. These institutions have the global membership required for such decision-making.
Municipalities need recurrent property taxes to finance service delivery
The ability for cities to raise revenues in a non-distortionary way for effective urban service delivery and infrastructure is essential to realizing the potential of urbanization. As most benefits from these investments will be capitalized in surging land values, recurrent taxes on land and other real property can be an incentive-compatible financing method. In developing countries, taxes on land and property are still far below those of developed countries, even in relative terms. Instead, cities often rely heavily on land transaction taxes, but these impose frictions on land market operations, push transactions into informality, and create incentives for fraudulent under-declaration of sales values.