Indeed, we proposed somewhere else a revised version of this old principle (the “presumptive benefit principle”) with a very specific content and targeted use. This being so, we could conclude that the benefit principle may be regarded as the hidden dogma underlying the most recent demands of the OECD and EU States on the ongoing international tax reform.īeyond these considerations, we believe that the benefit principle may still be of value today. ![]() In this context, the old benefit principle is able to provide a consistent theoretical foundation for this claim: taxpayers ought to be subject to tax wherever they perform their economic activities insofar as such performance automatically makes them potential beneficiaries of the host State´s public infrastructures and services. While it is evident that both international organizations have placed among their most urgent priorities the re-establishment of the link between taxation and the location of actual economic activities, they have failed to provide any sound tax policy reason(s) why tax bases ought to be allocated wherever economic activities are taking place. Yet, we have the feeling that the spirit of this tax policy guideline is somehow present in these documents and we may have found an explanation for this. At least, there is no express reference to the benefit principle whatsoever in any of their relevant reports or drafts on the topic. OECD and EU) appears to be negative at first glance. The response from the most prominent international policymakers (i.e. The question that now arises is whether this old tax policy principle should be rescued from oblivion and further play some role in the tax policy discussions currently going on in the international arena, most notably those concerning the proposals on the taxation of the digital economy. Beyond these very limited cases, the truth is that the configuration of the vast majority of taxes appear to completely disregard benefit considerations and instead rely on other principles such as ability to pay, which demands taxpayers with an equal ability to pay to be subject to the same amount of tax. In these scenarios, the very reason why citizens are compelled to pay taxes in the first place is precisely the fact that they are directly benefiting from a government activity, while the own amount of the tax due is commonly directly correlated to the cost borne by government to provide such benefit. ![]() highway tolls, tuition fees or charges for administrative concessions or licenses). Today, the usefulness of the traditional version of the benefit principle appears to be confined to those taxes that are paid as a direct consideration for citizen use of government property, facilities and services (e.g. Broadly speaking, it has customarily implied that taxpayers ought to contribute to government in proportion to the benefits obtained from government institutions and programs. The benefit principle is widely known as a traditional justification for the imposition of taxes.
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