G20: dealing with too-big-to-fail banks, corporate tax avoidance, and development

23 Jun 2014

Overview: This issue of the G20 Monitor addresses the ‘too big to fail’ dilemma of major financial institutions, combating tax evasion and avoidance through ‘base erosion and profit shifting’ (BEPS), and a report from the ‘G20 and Development’ conference hosted by the G20 Studies Centre and Griffith University.

Key findings

  • Systemic banking crises are rare, and their cost fades from memory, not least for policy-makers. The challenge is to establish a sensible trade-off between reducing the ex-post cost of TBTF, while minimising the ex-ante costs of doing so.
  • A number of contradictions have emerged within the OECD-led push against Base Erosion and Profit Shifting (BEPS) - the result of creative company tax strategies. These include: whether tax avoidance and evasion via international profit shifting and the use of tax havens is really all that new, how big the problem actually is, and what can meaningfully be done about it.
  • The biggest contribution that the G20 can make to progressing the BEPS agenda may be in pushing for the ‘power of transparency in minimising aggressive tax planning strategies’.
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