Worldwide, some encouraging trends in tax are greatly contributing to a generally positive economic outlook.
Brian Peccarelli, president of tax & accounting at Thomson Reuters, hasn’t seen a mood this buoyant at the World Economic Forum for at least seven or eight years. Changes in global tax structure and an increase in tax-system transparency worldwide are making for, in the words of Reuters Editor at Large Axel Threlfall, “lots of happy-looking chief executives walking around here at Davos.”
Taxes aren’t the only reason for the generally sunny global economic outlook, of course.
“We’re seeing not only just business optimism, but consumer confidence,” said EY CEO Mark Weinberger. “Interests rates are low, wages are rising, so a really positive story across the board. It is a lot driven by some of the U.S. tax reforms, but it’s also driven by a strong China and a re-engaged India and a lot of the de-regulation.”
Even so, the general shift toward tax regimes that are open and reasonably consistent across borders seems to be having an impact.
“I think when you look at it, eight major countries lowered their tax rates – Hungary is all the way down to nine percent, so they’re leading the way there,” Peccarelli said. “Is it leveling the playing field across the board? It’s a tough argument, maybe, but when you see the transparency and what Base Erosion and Profit Shifting (BEPS) are all about it and the effect they’re having, it seems like we’re heading in that direction.”
Keep up with what’s happening at the World Economic Forum by checking in with Davos updates from our on-the-ground teams.