2017 – The year of shifting fault lines

2017 – The year of shifting fault lines

Grant Wardell-Johnson speculates about the changes and challenges 2017 may bring for the world and for tax.

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Leader, Australian Tax Centre

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Arguably the most famous opening paragraph of a work in English literature is that of Dickens’ A Tale of Two Cities. It was written in 1859 and was about the year 1775. I suspect most readers of this column could quote at least the first few lines. I like the concluding words of the paragraph: “in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

In writing about a new year, there is always a risk of over-using the superlative degree. The year 2017 is not different and one must be careful not to exaggerate. That said, it impresses me that 2017 is The Year of Shifting Fault Lines. While 2016 gave us the Brexit Referendum and the US Presidential Election, 2017 will give us the administration of the 45th American President and the Article 50 trigger for negotiating the withdrawal of Britain from the European Union. Significant, and as yet un-envisaged changes may result from these events. Also the important elections in the Netherlands and France from March to May may expand these divides or temper them.

What are these new fault lines and how do they relate to tax?

The old divides of left versus right – difficult as they always were – seem to be even more diminished in their meaning. The new ones appear to be:

  • elitism vs populism
  • globalism vs ultra-nationalism
  • continuation vs schismatic new order
  • due process vs flexible direct action
  • rules vs discretion
  • possibly Kant vs Machiavelli.

Most of us would believe that a milieu of populism, ultra-nationalism, flexibility and discretion tends to be a difficult environment for ‘good’ taxation, particularly on the international front. Good taxation prefers a setting of respect for globalism, due process and firm rules.

But there must be an optimistic side to the new fault lines: they give rise to new opportunities, seeing problems in new ways, discussing basic principles, asking different questions. Finding innovative paths for development and growth and involving fresh relationships.

My belief is that 2017 as The Year of Shifting Fault Lines will ultimately give rise to positive change. How that will come about? I am not so sure. But our capacity and spirit is prodigious.

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