What Europe Needs to Do to Tackle the Triple Crises of Tax, Finance & Climate

Our new paper for the European Parliament highlights how old approaches to international governance are increasingly out of date in the day and age of increasing globalization. We now live in a world that is highly interconnected, is full of externalities and is increasingly fast paced. (Available for download in our publications section)

The ever faster and larger cross-border flows of commerce, people, and information technologies has reduced the idiosyncratic risks by allowing us access to an increasing array of options for example for investments or suppliers. At the same time, the higher degree of interconnectedness that this has brought about means that the risk of system wide failure – the dominoes all falling together - has increased significantly as demonstrated by the recent world wide collapse in cross border finance and trade.

Existing international governance structures to pursue shared global goals and manage externalities were designed at a time when systemic risk, externalities and the pace of change was much slower. These institutions and their approach to global governance now look increasingly out of touch. There is an urgent need to plug this governance gap that grows by the day.  

Financial Transaction Taxes: Tools for Progressive Taxation and Improving Market Behaviour

Financial Transaction Taxes: Tools for Progressive Taxation and Improving Market BehaviourThe discussion on financial transaction taxes is reaching a climax. There have been several suggestions for the form such a tax should take and many estimates for how much revenue levying such taxes would generate often running into hundreds of billions of dollars. 

In a new Re-Define policy brief we have addressed the all important question of the incidence of financial transaction taxes, seeking to answer the question ‘who pays in the end’, should FTTs be widely introduced. We also demonstrate how a differentiated transaction tax regime can address market behaviour issues such as churning and excessive short termism as well as help reduce systemic risk. 

Re-Define Managing Director Sony Kapoor is interviewed by Euractiv.com

Ex-Lehman banker says EU should crack down on big banks

Instead of addressing fundamental issues like the role of finance, politicians seem stuck in assuaging public anger, argues Sony Kapoor, manager of the international think-tank Re-Define, in an interview with EurActiv.
 
Kapoor, who has testified on financial regulation at the European Parliament, says world leaders have so far shown a lack of vision in reshaping the post-crisis financial system, arguing that it will be up to the EU's competition authorities to clean up.Outside Brussels, national leaders are missing the bigger picture, says Kapoor, though some have come up with "politically palatable" proposals.
 

Tackling Tax Havens - Adressing Fiscal Deficits, Financing Development and Stabilizing Finance

Anna Gibson, Research Associate, Re-Define

The German government recently decided to purchase stolen data revealing tax avoiders hiding money in Swiss bank accounts. This is a risky move diplomatically, but, for Germany, the gains from tackling this tax flight appear to outweigh the risks. It is also illustrative of the proliferating efforts by individual governments and the international community to clamp down on tax flight: the loss of tax revenue due to cross border tax evasion or avoidance.

However, the recent spat between Switzerland and Germany is merely the tip of the iceberg; symptomatic of what is one the most serious systemic failures of our time: the lack of intergovernmental cooperation on cross-border financial matters.

Tackling Sovereign Debt Systematically - If Not Now then When?

Anna Gibson, Research Associate, Re-Define

Development actors have long argued for an overarching international mechanism that would resolve sovereign debt crises in a fair, transparent, and consistent manner. Such a mechanism would assist poor countries that often suffocate under unsustainable levels of (sometimes odious) debt, lacking the political power and legal rights to negotiate with their creditors in an impartial and efficient forum. It would make handling sovereign debt problems less messy, more predictable, and the burden sharing simpler and fairer. It would also provide incentives to curtail irresponsible lending policies on behalf of creditors.

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