Justice, Equality and Tax Law

S. 721. Introduction

For almost a century, the rules of international taxation were determined by a model of treaties drawn up by the League of Nations which corresponded to a time when multinational groups were not yet important and international operations were limited. This framework somehow shattered during the financialization of the economy in the 1980s. Taxpayers could, in fact, arbitrate one sovereignty against another, and governments realised that the rules of international taxation were no longer in line with economic reality.

States thought they had fiscal sovereignty, consent to tax being at the heart of democracy. However, with an open economy, the wealthiest people in the largest multinationals could easily relocate their wealth and their income to jurisdictions that took advantage of this handing over of the economy across borders and offered privileged tax regimes to attract global wealth. The shift in perspective has brought to light a long-standing inconsistency in the concept of “aggressive tax planning” in states that have long been actively – if not aggressively – engaged in the use of their tax systems to attract capital by means that must henceforth be avoided.

On t...