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#OECD says states can do more to tackle wealth inequality by effective taxation of capital

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Maybe not news, but the fact that the OECD is addressing the issue of wealth inequality and the need to ensure effective taxation of capital is welcome. 

The taxation of personal savings and wealth varies widely, offering governments significant scope for tax reforms that simultaneously improve both the efficiency and fairness of their tax systems, according to two new OECD reports.

The reports – Taxation of Household Savings and The Role and Design of Net Wealth Taxes - recognize that taxes are among the most effective tools governments have for reducing inequalities and bringing about more inclusive growth.

“While countries do not necessarily need to tax savings more, there is a lot of room to improve the way countries tax savings,” said Pascal Saint-Amans, director of the OECD Centre for Tax Policy and Administration.  “There is also a very strong case to be made for addressing income and wealth inequality through the tax system, notably by ensuring effective taxation of capital. Governments have an opportunity to increase both the efficiency and fairness of their tax systems, and these reports outline concrete measures to help achieve this,” Saint-Amans said.

The report outlines a range of opportunities for greater tax neutrality across different types of savings to foster more inclusive growth. At the same time, it recognizes the case for preferential tax treatment to encourage retirement savings, in light of population ageing and increasing pressure on social security systems.

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