Remarks by Angel Gurría
Washington, USA - 20 April 2018
(As prepared for delivery)
Ministers, Central Bank Governors,
The menu of policy options you agreed to develop will be an important step to ensure that ambitious collective policy responses are taken to seize the opportunities of technological change and to make sure no one is left behind. Let me focus on three areas of the “menu”.
First, reforming tax and transfer systems is essential to deliver stronger and more widely shared growth in a rapidly changing world.
Let me give you two examples of why we need to reform our tax and transfer systems:
First, new digital technologies are likely to increase the mobility of companies, capital and people. The resulting risk of increased tax avoidance and evasion continues to require further international cooperation. Increased mobility may also limit the ability of income taxes to reduce income disparities. This will require smart changes to the tax mix such as a base broadening, income tax reform and a shift to less mobile tax bases, such as property taxes and VAT, to ensure that the tax system continues to deliver inclusive growth.
Second, the gig and platform economy is likely to accelerate the rise in non-standard forms of work that we have already been observing since the mid-1990s. Since then, more than half of new job creation in advanced economies has taken the form of non-standard work. This calls for an adaptation of benefit entitlements so that all workers, regardless of employment status, are provided with effective social protection. It will also be important to reduce tax incentives that may lead firms to increase non-standard forms of employment.
Finally, reforms may be necessary to provide those with non-standard work arrangements with the means and opportunities to invest in skills. For instance, tax credits for training may need to shift from jobs to individuals such as through the recently proposed individual learning accounts in France and the Netherlands.
The OECD is currently finalising a study on tax policies for inclusive growth in the changing world of work. So you can count on our support to develop this area of the policy menu further.
Second, we need to preserve competitive conditions as the digital economy transforms markets and business models.
Competition encourages and diffuses innovation, and helps bring the gains from technology to consumers. But mark-ups - one possible measure of market power – have been rising – and, as our ongoing research shows, significantly more so in firms in digitally intensive sectors. Moreover these gains have been concentrated in a few firms. Mark-ups can be up to about 40% higher for firms in the most digitally intensive sectors compared to firms in other sectors.
Competition policy designed for the offline economy should be looked at again to tackle new issues in the digital world. Barriers to competition may restrict the diffusion of productivity gains from new technologies, while the platform economy and potential “winner takes all” dynamics may unduly concentrate market power. Given the international nature of digital activity and potential for spillovers, reviewing such regulations in a coherent international framework is also warranted. To address these challenges, and as called for by the G20 Digital Ministerial in 2017, the OECD is updating its guidance on reviewing regulations included in its Competition Assessment Toolkit.
Last but not least, better policies need better data. Digitalisation and structural changes challenge the way we measure economic progress as well as our ability to track what happens to jobs and skills. International cooperation to improve and collect data is essential. In the Sherpa Track, the OECD is already working together with other IOs and G20 members to develop a G20 Toolkit for Measuring the Digital Economy that will take stock and highlight some key measurement gaps.