Allison Christians notably shared the OECD blueprints on the pillar one and pillar two proposals on her blog before they became public, offering tax professionals beyond a privileged few valuable time to assess the plans.
However, Christians has done much more than that over the past year and secures a place in ITR’s Tax 50 for her work in international tax matters.
Christians has strong views on what the OECD could do better, suggesting alternative solutions to the digital tax proposal, such as a third pillar, and is keen to see the United Nations Sustainable Development Goals (SDGs) be achieved through tax policy advancements.
Most notably, however, the tax professor posted the pillar one and pillar two blueprints on her blog in September 2020 once she discovered they had been shared between some law firms and multinational companies.
“I would not say that I leaked the documents, rather I disseminated more broadly that which had already been leaked to a select group,” Christians tells ITR.
Christians had learned that the blueprints were circulating among some lawyers and the Big Four accounting firms. An hour after making a request via Twitter for someone to share the documents with her, she received half a dozen copies from different sources.
“As we have seen in the past, once ideas are set out in official looking documents, it is harder to influence the direction of policy reform. Those who had the documents in advance of public dissemination had already had an unofficial, and unacknowledged, opportunity to make their views part of the final document,” explains Christians.
“I made the documents more widely accessible beyond that privileged circle, but they were already fully leaked before I received them,” she adds.
Christians believes policymaking needs to be more transparent at the national level and internationally at the OECD to make the process fairer.
“I believe this transparency is particularly appropriate as we look to BEPS 2.0, especially in terms of knowing who is making what suggestions to shape the influential policy documents that we are told are being forged through the fully equal participation of all Inclusive Framework member countries,” she says.
Monitoring the digital tax developments is a challenge many experience. Christians says she tries to keep up with the “extraordinary volume of materials” by making list after list of things to read and think about, and then gradually reading, absorbing and writing about what she has consumed.
Pillar three
Christians appears to have little faith in real progress at the OECD, however. She believes that the programme of work on digitalisation is likely to produce a global tax deal that looks much like the old one, with a relatively modest redistribution of taxing rights among a few key states, thus missing an opportunity for meaningful reform.
“I don’t think that anything has changed in the world that would change my mind on this point,” Christians says. “The OECD itself seems to recognise this, in proposing a third pillar aimed specifically at addressing issues more relevant to low income countries.”
Christians also wants to see the OECD release the data that led to its impact assessment of the tax challenges arising from the digitalised economy to allow independent researchers to investigate the organisation’s findings.
The OECD used a combination of public and non-public data sources in its analysis, but Christians says designing a comparative measurement tool without external review, replicability, and critique “violates good research principles”.
“External scrutiny is useful to improving research methodology, to ensure that the proposed method actually produces reliable data. Since the OECD’s work has a global impact on a multitude of stakeholders, review by non-affiliated researchers seems appropriate. Of course, the OECD understands very well the importance of peer review, as it has implemented multiple forms of such review when it comes to compliance with agreed standards,” Christians explains.
Nevertheless, the tax professor and her colleague Tarcisio Diniz Magalhaes have suggested in a paper that there needs to be a ‘pillar three’ that creates a global excess profits tax.
Although she continues to receive inquiries about this, Christians says implementation at the global scale is hampered by the delay in reaching an agreement on pillars one and two. “I fear that no agreement will be reached on either pillar,” she says. “If no agreement is reached, the prospects for a third pillar built on the same foundation are reduced.”
That said, the core idea of excess profits taxation does have real merits, and is being examined by many policymakers, according to Christians.
“We are seeing news stories about those who are realising extraordinary windfalls due to the pandemic. When it comes time to finding revenues, there will be more political appetite for a tax that fairly distributes the burdens, and that does so without unduly impacting economic growth. A tax that reaches pure economic rents, as our pillar three seeks to do, is a viable reform in that sense,” says Christians.
Environmental tax policies
Another key area of Christians’ work is that on environmental tax policy.
“I’ve been working on the intersection of tax and sustainability for some time, and in 2020 was pleased to receive a five-year research grant to continue that work, which I am doing in collaboration with experts in law, philosophy, environmental science and engineering, as well as investors interested in promoting sustainable tax practices,” explains Christians.
Moving beyond an excise tax on carbon emissions will be important for tax to more closely align tax policy with sustainability goals.
“We need to overcome the systemic unsustainability that is currently subsidised by conventional income tax norms, including in highly technical areas like transfer pricing, as well as in the procedural rules we use to work out conflicts among jurisdictions,” says Christians.
As the tax professor continues work on her reform proposals, the coming few years will be focused on conducting case studies and further research.
Yet 2021 will be busy for Christians as she completes a manuscript on a new normative justice framework for international taxation with Laurens van Apeldoorn from the Open University in the Netherlands, entitled Tax Cooperation in an Unjust World. She will also be working on an edited collection with Sergio Andre Rocha on the Multilateral Instrument, in which she will outline her MLI 2.0 wish list.
Nevertheless, Christians will continue to participate in the digital tax debate, as well as cataloguing the different ways that countries have taxed or could tax cooperative surplus, which refers to the gains produced through cross-border cooperation, including some that are not yet accounted for in the global corporate tax base.
“In keeping with 2020, I expect the flow of information and updates on tax to be quite voluminous in 2021 and so a big challenge will be to continue to keep up with developments as they happen while still undertaking careful research - an inherently slow process,” says Christians.
“If no agreement is reached on pillars one and two, and perhaps even if it is, I expect that there will continue to be significant movement on digital services taxes of various kinds, together with trade conflicts surrounding those taxes,” she continues.
“As such, I expect to keep working on understanding the intersection of tax and trade in 2021,” she adds. “These issues intersect with the question of sustainability in taxation, so I expect some synergies across these topics in the coming years.”
