Disclosing tax data

The Swedish Tax Calendar (above) lists the incomes and taxes paid by all Swedish citizens. In most other countries, data on individual taxes is secret and made public only because of leaks and court orders. But a public interest argument can be made for mandating that the highest officials disclose the taxes. they paid.

The Swedish Tax Calendar (above) lists the incomes and taxes paid by all Swedish citizens. In most other countries, data on individual taxes is secret and made public only because of leaks and court orders. But a public interest argument can be made for mandating that the highest officials disclose the taxes they paid.

In 2008, Italy’s deputy finance minister published online the declared incomes and corresponding taxes paid by everyone in the country. Vincenzo Visco had led the government’s campaign against tax evasion and believed that Italy’s debt had reached disastrous levels. He said the publication of tax data was “an exercise of transparency, of democracy.” That exercise, however, quickly ended as Italy’s data protection agency ordered the information taken down after a day, saying that its publication violated privacy.

Taxes most everywhere are a controversial issue – just ask Gerard Depardieu, who fled the high taxes of his native France and accepted the offer of Russian citizenship last week. Around the world, many governments are proposing painful solutions to the problem of public debt and imposing heavier tax burdens on citizens. As government services are cut because public coffers are bare, public attention is shifting to the taxes paid – or not paid – by the wealthy and the privileged.

The problem with investigating the taxes paid by individuals is that this information is confidential. And since Visco’s exercise in pique, no country has followed Italy’s example. The exception is Scandinavia, where tax information has been public for over a century (more on how to access this information below). In some countries, too, it’s customary, though not mandatory, for candidates for the highest office to disclose their tax returns. Even in secretive Ukraine, candidates in the last election made public their tax ID numbers and their properties.

There’s been a lot of progress in the last two decades in legislating the disclosure of the assets of officials. The World Bank says that 78 percent of 176 countries it surveyed recently had financial disclosure systems, although only 42 percent made the disclosures public. Asset disclosures, says the Bank, are essential to fighting corruption, illicit enrichment and tax crimes. A public-interest argument can be made that tax disclosures are also a crucial anticorruption tool, yet only a few countries – and no international financial institution – have proposed making such data open.

But if officials are already required to declare their income and assets, why shouldn’t they be required to make public their tax payments as well? It’s hard to argue that revealing information on private taxpayers is in the public interest. But government officials are supposed to set the example for tax compliance because they are the custodians of the public purse. Because they decide how the burden of tax payments is shared, then citizens should be told whether those they elect to office are carrying their fair share of that burden. There can be persuasive arguments as to why heads of state, Cabinet ministers and members of national legislatures should declare their taxes. Read the rest of this entry »

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