For mitigation efforts against climate breakdown to be effective they need to bring in the private sector in a meaningful way. Current standards for financial reporting for commercial organizations focus on the interests of capital suppliers to the exclusion of other stakeholders and civil society. These stakeholders include the suppliers of capital, trading partners, employees, regulators, tax authorities, and civil society. So far initiatives to include environmental and social costs have been additive rather than substantive. In this think piece we offer a radical proposal in the form of sustainable cost accounting (SCA). As a standard SCA would build on existing accounting principles to require commercial organizations to report on how they will manage the costs of becoming net carbon zerocompliant. SCA does not include carbon pricing or the cost of offsets. It would require the commercial organization to establish the costs of the transition to carbon neutrality. Regulatory requirements, enmeshment in transnational standards, and adequate auditing would implement SCA. If SCA was mandatory and comprehensively applied it would take a significant step in bringing business onside in addressing climate breakdown.

International Journal of AuditingVolume 26, Issue 1 p. 44-47 SPECIAL ISSUE ARTICLE The future of auditing Richard Murphy, Corresponding Author Richard Murphy richard.murphy@taxresearch.org.uk Richard Murphy, Department of Accounting and Financial and Management, Sheffield University Management School, Sheffield, UK. Email: richard.murphy@taxresearch.org.ukSearch for more papers by this author Richard Murphy, Corresponding Author Richard Murphy richard.murphy@taxresearch.org.uk Richard Murphy, Department of Accounting and Financial and Management, Sheffield University Management School, Sheffield, UK. Email: richard.murphy@taxresearch.org.ukSearch for more papers by this author First published: 02 March 2022 https://doi.org/10.1111/ijau.12266 Richard Murphy is also a Professor of Accounting Practice, Sheffield University Management School; Director, Tax Research LLP; Director, Corporate Accountability Network; Co-Founder, The Green New Deal; Columnist, The National Newspaper, 33 Kingsley Walk, Ely, Cambridgeshire, CB6 3BZ. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Volume26, Issue1January 2022Pages 44-47 RelatedInformation

The tax gap has been described as the amount of tax jurisdictions do not collect, caused by the tax system not being appropriately complied with—in the manner intended by the tax authority—given the current tax laws in operation. That description does, however, ignore the fact that substantial parts of their potential tax revenues are not collected by all governments as a result of their decisions not to tax some tax bases, or because of granted tax allowances, reliefs and exemptions, many of which in turn provide opportunities for tax abuse. This chapter considers the implications of reframing the tax gap to include these tax losses that arise as a result of government policy and suggests the changes in perception, including in macro-economic as well as micro-economic thinking, that might result if this were done. For this, the use of tax spillover analysis is recommended.

'Reglobalization' requires global governance mechanisms that can promote norm and normative change constitutive of a 'post-neoliberal order'. Mitigating the race to the bottom in taxation, which can harm public provision and social mobility, is a specific challenge requiring the creation of new tools. This requires going beyond the current reporting tools of global tax governance to focus more systematically on government policies. We develop a political case for conducting assessments of a phenomenon known as 'tax spillovers'. These are harmful impacts one country's tax policies have on other countries, that can also undermine the redistributive capacity of the home tax system. We identify five enabling conditions that give tax spillover assessments political salience, traction and feasibility. Devising and theorizing policy tools that are politically feasible is a pressing task for the reglobalization project that is deserving of scholarly, as well as practitioner, attention.

Tax is traditionally viewed as the main funding mechanism for government spending. Consequently, social policy is often seen as something determined and constrained by tax revenue. Modern Monetary Theory (‘MMT’) presents a reversal of the tax-spend cycle, by identifying a spend-tax cycle. Using the UK as an example, we highlight that one of MMT’s most important, but under-explored, contributions is its potential to re-frame the role of tax from both a macroeconomic and social policy perspective. We use insights on the money removal, or cancellation function of taxes, derived from MMT, to demonstrate how this also creates possibilities for using tax to achieve social objectives such as mitigating income and wealth inequality, increasing access to housing, or funding a Green New Deal. For social policy researchers the challenge arising is to use these insights to re-engineer tax systems and redesign social tax expenditures (STEs) for creative social policy purposes.

Issues relating to tax avoidance and evasion, which make up most of the tax gap, have played a major role in the political narrative of many countries since the global financial crisis of 2008. Despite this economic theory has little to say on the subject whilst political responses have been partial and have rarely been evidence based. This paper suggests that this is because the tax gap has been poorly understood to date. The result has been that the implications of the tax gap for governments, the rule of law, the austerity narrative and the provision of public services as well as its consequences for market risk, investment, productivity growth and economic and social inequality have very largely been overlooked in most official as well as academic discussion on the subject to date. These consequences, it is suggested, justify increased investment in developing new understanding of the nature of tax and its role in the economy and, as a consequence, new tax gap methodologies so that full social and economic consequences of not collecting tax due can be properly appraised.

Abstract The tax gap between taxes that are “actually” paid and taxes that “ought” to have been paid by multinational corporate entities has become an area of huge public policy concern in the recent decades. This study reviews the impact of new legislation to reveal the tax gap created by the EU banks and financial institutions passed in 2013 and in particular of the quality of the resulting country-by-country reporting (CBCR) requirement for banks. Although resulting tax gap estimates are noted, they suffer due to significant problems in the published data; much of it is due to the quality of the regulation requiring its publication and implementation. The findings reveal a lack of understanding of the technical and structural weaknesses of accounting in a transnational context in the design of this regulation. CBCR is destined to fail in achieving its regulatory objectives in this context unless necessary reform of the regulation is undertaken.

I would like to thank Oats and Tuck (2019) for their comments on country-by-country reporting. I have a close relationship with this as I wrote the first ever version of it in the form in which it ...

Tax spillovers are the effects one country's tax rules and practices have on other countries. They have been assessed in aggregate terms by the IMF using econometric models, and were found to have a 'significant and sizable' impact in reducing corporate tax bases and rates in 'developing countries. However, a widely accepted form of country level spillover analysis remains elusive, despite demands from non-governmental organisations (NGOs) and international organisations (IOs). We present the first framework for conducting comprehensive national level spillover analyses using a qualitative evaluation framework in three steps. First we identify the importance of the normative underpinnings of multilateral evaluation frameworks. We make the case for an international moral harm convention that discourages states from doing harm to other states through their tax policies. Second we illustrate some of the difficulties in conducting country level spillover analyses using econometric methods, while advancing a broader conception of spillover, based on the defensive purpose of corporation tax. Third we present a new framework for conducting spillover analysis, that assesses relationships between four direct taxes and a number of administrative and institutional features of tax systems. Finally, we present initial pilot qualitative assessments for the UK and Denmark, involving scores, risk dashboards and visualisations.

The global economic crisis means that financial re-regulation is, finally, on the agenda. Most people now agree it is needed, on a global level. Some say this is impossible in a world of…

Multinational corporation tax avoidance is primarily about tax avoidance. That is, recording transactions in ways that are legal but which might not meet with the approval of the all the tax authorities who might be impacted by the way in which transactions are recorded are reported. This is most especially true of many transactions involving tax havens. The problem with tracing transactions recorded in these places has, however, been locating any data on them because if the accounting opacity that they create, which is also permitted by existing accounting standards for multinational corporations. Country-by-country reporting was created to tackle this opacity head-on by requiring that all large corporations report all their transactions wherever they might arise. The result could be far greater information on the illicit financial flows of major companies, or their potential elimination.

We live in an era characterised by a complex and dynamic relationship between financial innovation, the state and patterns of investment. At its core is the little understood issue of shadow money-a 'promise to pay' backed by high-grade collateral, usually government bonds, which means that government debt now plays a key role in the stabilisation of the financial system. Central banks' growing appreciation of how shadow money can generate destabilising dynamics has necessitated them to take preventative actions, and new forms of central bank-led systemic stabilisation have materialised. This new and complex dynamic requires a new social contract, the investment state-a compact between the state and financial markets and between the stabilisation and investments arms of the state.

This paper reviews the prospects for a global public database on the tax contributions and economic activities of multinational companies. It is divided into four main sections. Firstly, we present a set of user stories, questions, requirements, and scenarios of usage for a database. Secondly, we look at what kinds of information a public database could and should contain. Thirdly, we look at the opportunities and challenges of building a public database drawing on various existing information sources. Fourthly and finally, we suggest next steps for policy, advocacy, and technical work towards a public database.