With the global economic crisis looming large and countries structuring a calculated response towards the situation, propositions to levy taxes globally have come up in the market. This proposition have been referred the name of Global Tax that is to be levied in general over certain proposed categories.
The categories that have been listed for such tax propositions on a global basis are banks that define financial institutions in general, tax on selected international financial transactions that is referred to the type of Tobin-tax and for Carbon taxes that is referred for energy usage.
Now, if you ask the aim behind such propositions, especially on the taxes on the financial institutions and transactions, certain factors work behind the proposition.
The focus is on recovering the fiscal costs to bail out the banks during the financial crisis. It also helps in assimilating funds for future use along with restricting the activities in financial transactions. However, achieving Global Tax in its true spirit is not an easy task.
For this, there needs to be a specific agreement in between the major countries on certain factors. Here is a look at those aspects –
- How is the revenue that is to be generated via collecting the taxes on a global basis to be shared.
- Analysing the tax base with inclusions and exclusions comes across as a major factor. Should it be levied only on the liabilities or assets of the banks?
- Who is to collect such taxes, as in with whom shall the statutory power retain. All countries protect the tax policies with care and will never like to pass it on to the international bodies.
- The object of the tax should determine the areas of levying taxes on financial institutions, should it be restricted only on the banks or other financial establishments too is to be brought in question. The same concept also works on the carbon tax restrictions only to fossil fuels or all resources of energy.
A general agreement should be drawn to carry out effective implementation of the Global Tax. Effective implementation relies on the countries under the calculations.
