Remarks by Angel Gurría
Buenos Aires, Argentina - 21 July 2018
(As prepared for delivery)
Ministers, Central Bank Governors,
We have to make sure that policies keep up with the technological change that has been transforming our economies at breakneck speed. The menu of policy options delivered today is a step towards better harnessing the full potential of technology, and ensuring its benefits spread across society.
The OECD is pleased to have supported this menu, with its analysis on competitive conditions and on tax policies in a rapidly changing world.
Many of the opportunities of the new technologies remain untapped. In France, for example 48% of the largest firms use cloud computing services (close to the OECD average of 47%), while only 14% of the smallest firms use these technologies, below the OECD average of 22%. We need to accelerate the diffusion of new technologies, and a healthy competitive environment is a key ingredient.
But, there are signs that competition may not be working as effectively as it should: Our research shows that market concentration and mark-ups - one possible measure of market power - are on the rise and significantly more so in digitally intensive sectors. Digitalisation raises new issues that existing policies may not adequately address.
Domestically, we must help ensure that regulations designed for traditional business models do not stand in the way of innovation or unduly favour either offline or digital providers. Our report identifies a set of principles to guide policymakers in conducting reviews of existing regulations. And looking forward to next year, the revised OECD Competition Assessment Toolkit will provide regulators with a tool to re-assess regulations in light of digitalisation.
Internationally, G20 members should work together to enhance international coordination among competition authorities on cases with a cross-border component, as digitalisation increasingly blurs borders in business activities.
Reaping the benefits of technological change requires managing the inevitable disruptions. More than half of the workers in OECD countries lack the basic skills to succeed in a technology-rich environment. Tax policy has a key role to play to soften any negative social impacts, promote equal opportunities and help displaced workers get back on their feet. There are two important challenges.
First, tax policies need to support inclusive growth and adapt to the evolving nature of work. Our report argues that this requires examining the progressivity of the entire tax and benefit system, rather than focussing on the progressivity of any one tax. To support people during transitions, it is critical to incentivise investment in skills and make work remunerative for lower-skilled workers. To adapt to the shifting nature of work, tax and benefit treatment should not unduly favour one form of employment contract over another.
Second, tax policy needs to ensure that globally mobile firms, people or capital do not erode the sustainability and the bases of tax systems. The tax mix should shift towards taxation that is pro-growth, pro-employment and difficult to avoid, such as property, consumption and environment taxes. Cooperation to prevent base erosion and profit shifting, with the implementation of the OECD/G20 BEPS package, is already yielding benefits and countries are working towards a consensus-based solution to the tax challenges arising from the digitalisation. But, digital technologies also bring new opportunities to simplify compliance and facilitate tax collection.
Each country has its own priorities, but policymakers around the world face common challenges. Let us work together to deliver better jobs and improved well-being for all our citizens.