Speech by Angel Gurría
08 September 2020 - Paris, France
Monsieur le Président, ladies and gentlemen,
I am delighted to be here this evening and it is an honour to address Re-Imagine Europa’s (RIE) Advisory Board. As an ‘incubator’ for new political ideas, RIE’s voice is crucial in promoting dialogue and helping us to address the many challenges that we face. I still have fond memories of the 2018 annual meeting, which the OECD hosted in Paris, where we discussed the need for a new value-driven narrative in Europe and a European policy model for the digital society.
Since then, a lot has changed. Europe has been thrown into a full-blown and unprecedented crisis, along with the rest of the world. Suddenly we are faced with a threat, which we do not fully comprehend, and the only way to tackle it has been to accept considerable restrictions to our daily lives and economic activity. The effects of the COVID-19 crisis have been devastating; over 889.000 people across the globe have lost their lives. Only in Europe, COVID-19 has taken more than 211.000 lives and millions of workers in Europe have lost their jobs . As disruptive as it is, this crisis presents Europe with an opportunity to re-focus and re-build a more inclusive and sustainable framework for its future.
Since the start of the crisis, the OECD has been actively supporting our Members and Partners to tackle the pandemic. We launched a Digital Hub on Tackling the Coronavirus, providing a single entry point to the OECD’s analysis on the economic and social impacts of COVID-19. To date, we have published 135 policy briefs in virtually all areas of our policy work. We have also provided policy advice to global fora such as the G20; we have kept open lines of communication with other multilateral organisations to ensure a co-ordinated and coherent response; and we have organised two virtual Ministerial Council Roundtables, as well as targeted COVID-19 Ministerial briefings for a number of our Member countries.
The European Union has also rolled out a number of impressive measures to support a green and inclusive recovery, including the Next Generation EU initiative and the generous Recovery and Resilience Facility. The political will is there and the resources are being mobilized; now we just need to get to work and help construct the future Europe we want to see.
The work of Re-Imagine Europa will be equally important in helping us to build new narratives and shared visions. Your proposals for a new visionary text – focusing on a new tax code for Europe and the fairness of the international tax system – are an excellent starting point and should be at the top of our agendas.
Indeed, evidence suggests that dissatisfaction with income inequality in Europe is high and that citizens are demanding more progressive tax systems. For example, in 14 out of 20 European countries for which the latest data is available, the median respondent would like to see top earnings decrease by more than 20%. Furthermore, 58% of middle-income households surveyed in 2018 declared that they “did not receive a fair share of public benefits given the taxes and social security contributions they pay” . OECD evidence also confirms that the redistributive impact of fiscal systems has weakened over the past three decades.
As European countries recover from the crisis, tax reforms will play a major role in restoring public finances. We have identified several ways of taking work forward along these lines. Let me briefly focus on three.
First, it will be critical to crack down harder on tax evasion and avoidance. Our work in the framework of BEPS has revealed that tax avoidance by multinational companies is estimated to cost USD 240 billion per year . I am hopeful that our work in this framework and on establishing a global minimum tax will counter such problems.
On a more positive note, I am pleased to say that at least 102 billion euros of additional revenues have been identified globally thanks to voluntary disclosure programmes and offshore investigations supported by the OECD. I am glad to announce that we will be delighted to support your efforts on tackling these challenges.
Second, we must ensure that our tax frameworks support a strong welfare system and high levels of social protection. Robust social protection plays a key role in ensuring equality of opportunity, promoting investment in human and physical capital and allowing people to recover from adverse shocks. This is a cornerstone of the European model and evidence shows that citizens are attached to this model. Across 15 EU countries surveyed in the 2018 OECD Risks that Matter Survey, 70% of respondents believe “government should be doing more to ensure their economic and social security”.
The million-plus workers in Europe who lost their jobs since the start of the pandemic need support as their livelihoods vanish. Evidence from EU countries suggests that such jobs may represent up to 40% of total employment in the most affected sectors. As we build back better, we must address the structural challenges facing social protection systems across Europe; strengthen the accessibility and generosity of minimum income benefit programmes; and promote well-designed wealth transfer taxes.
Third, sustainability and the low-carbon transition should be at the heart of our efforts. The challenge is making it happen in a way that puts people at the centre of the debate. The green economic recovery will only be successful if it leaves nobody behind. Making the tax system fairer and greener is part of that effort. Europe has built its central climate policy around emissions trading, rather than a carbon tax. In July, the price of emissions hit €30 per ton, its highest value since before the 2008 financial crisis.
Nevertheless, there is still a lot that we can do with the tax system. For example, shifting away from taxing labour and capital towards taxing environmentally harmful consumption would be a major step in the right direction.
Monsieur le Président, honorary Board Members,
This crisis is giving us a unique opportunity to rebuild our economies. Building back better will require forward-looking reforms and concerted efforts on behalf of European leaders and policymakers. Without the engagement of citizens however, these efforts will be in vain.
As we focus on the recovery, it is of utmost importance that we promote a new social and economic system that has full public support. This is where Re-Imagine Europa will have a major role to play and you can count on the OECD to work with, and for you, in these efforts.