Presentation | 10/26/2010 | 02:45 PM
Restructuring of Corporate Income Tax: Lesson from Mirrlees review and practices of tax reform

Prof. Motohiro Sato, Hitotsubashi University, Tokyo

In the era of globalization notably characterized by cross border mobility of capital, there has been increasing concern over future of corporate income tax (henceforth CIT). Many nations so far have responded to newly emerging economic environments this challenge by cutting their CIT rates. In the last decade, OECD average of CIT rates has been driven down from 35% to 28%, international tax competition being intensified. This has raised question if CIT can survive or how CIT should be restructured to meet the challenge. It seems that serious consideration should be made on fundamental tax reform involving CIT.
In this lecture, I would like to introduce discussion over this agenda in academic and policy making spheres. To be specific, I first overview the Mirrlees review of IFS (Institute of Fiscal Studies) in the UK. The review addresses shift from income to consumption taxation. The new thinking of CIT such as ACE and cash flow tax will be illustrated in the lecture. Then we turn to practices of CIT reform with special reference to tax reform of 2007 in Germany and assess them from the viewpoint of the Mirrlees review. I would also like to present contemporary situation and policy debate over CIT in Japan that has confronted with intensive tax competition with other Asian countries such as China and Singapore.