The Global Initiative for Fiscal Transparency (GIFT), the International Budget Partnership (IBP) and the University of Sheffield have launched a major new training programme on tax transparency. The 32-part video series, available here, sets out why tax transparency matters, how it can be created, and how it can strengthen tax systems and democracy alike.

I recently took part in a discussion about this project with Professor Andrew Baker of the University of Sheffield, who worked with me on developing the course, and with colleagues from IBP.

What follows is a summary of the ground we covered and the lessons that flow from it.

Building on earlier work

This course builds on years of research and practice. The roots go back to Making Tax Work, a piece of work co-authored by Andrew and me, that grew out of GIFT's efforts to understand how civil society could be better engaged in tax policy. That project made clear two things.

First, transparency is essential if tax systems are to function fairly. Without transparency, no one can properly understand the basis of taxation or hold governments to account.

Second, transparency needed to be codified into principles. Together, Andrew Baker and I identified ten high-level principles of tax transparency. Working with GIFT, we then developed those into fourteen principles. After consultation with the OECD, IMF, World Bank, national treasuries, revenue authorities, and CSOs across the globe, the principles were formally adopted by the GIFT General Council in Bogotá in 2022.

This video series is designed to explain these principles, demonstrate their practical application, and promote them as a valuable resource for governments, tax officials, civil society, and international organisations.

Beyond the OECD definition

It is important to note that tax transparency is often misunderstood. In the international community, the term has usually been defined in narrow ways. The OECD, for example, has treated it as mainly a matter of two things:

• Information exchange between tax authorities, designed to identify where taxpayers are located, and

• Additional disclosures by multinational corporations about their global activities.

Both of those are valuable. But they are far too limited. In our course, Andrew Baker and I define tax transparency more broadly:

Tax transparency means providing the quantitative and qualitative information that interested parties need in order to hold policymakers to account and to assess how well a tax system is functioning.

That definition matters. It makes clear that transparency is not a technical fix between authorities. It is a responsibility of governments to make high-quality, reliable, accessible information available to their citizens. And it makes clear that transparency is not just about inputs, but about outcomes: how well a system works in practice, who pays, who does not, and whether the stated goals of policy are achieved.

Tax and the social contract

Throughout the course, we emphasise that tax is not just about revenue. It is at the core of the social contract between citizens and the state.

Citizens are asked to return part of their income or wealth to government. In exchange, government provides services, supports the economy, and manages society. But that arrangement will only ever be accepted as legitimate if it is transparent, fair, and accountable.

Research confirms what common sense suggests: when people see the tax system as fair and open, their willingness to pay rises. Tax morale improves. And with higher morale comes stronger compliance and more sustainable public revenues.

This is why transparency matters so much. Without it, suspicion grows, avoidance flourishes, and the very foundations of the social contract begin to crumble.

Integration with budgets

One of the strongest points made in our discussion was that tax cannot be treated separately from budgets. Numbers in budgets are meaningless without narrative.

If a government says it will raise so much revenue from VAT, we need to know how many firms are expected to be registered, at what rates, how often they will pay, and who is bearing the burden. If a government says it will raise so much from income tax, we need to know how many people are in scope and whether those numbers are realistic.

Equally, if governments say they will raise a given amount of revenue, and then consistently fall short, that gap must be interrogated. Are people not declaring? Is the administration failing to identify taxpayers? Are laws inadequate? These are the questions that transparency allows us to ask. And only by asking them can next year's budget be made better than the last.

We think this form of accountability for tax is vital and very rarely available anywhere in the world. This is why we spend time on the issue, which also provides a key link to the work of IBP on this issue.

Tax gaps, tax spillovers and risks

A further key contribution of our work is the development of the concept of tax spillover analyses, which explain why tax gaps arise.

The IMF once attempted to measure spillovers econometrically, essentially quantifying the harm that tax havens impose on other jurisdictions. But the data was too noisy, and the results inconclusive. We took the idea further.

Spillovers, as we define them, are the risks and harms a tax system creates for itself and for others. For example, if corporate tax rates are set far below income tax rates, money will inevitably shift into corporate structures, undermining the income tax base. That is a domestic spillover.

Internationally, aggressive low-tax regimes deprive other countries of revenues, encouraging brass-plate registrations of companies with little real activity. That is an external spillover.

Transparency means recognising these risks, assessing them openly, and ensuring policy avoids creating them. Tax spillover analyses and tax gap analyses, when properly prepared, are the gold standard of tax transparency.

Inequality and hidden subsidies

Perhaps the most urgent area for transparency is inequality. No tax system in the world gets this right.

Too often, tax codes are riddled with exemptions, reliefs, and allowances that benefit the wealthy and powerful. In the UK, so-called “tax expenditures”, representing giveaways through the tax code, now cost around £400 billion a year, twice the budget of the NHS. Yet we have no clear breakdown of where that money goes.

What we do, however, know is that 81% of UK wealth is held in heavily tax-incentivised assets. It is reasonable to conclude that a great deal of the £400 billion subsidy is flowing to those who already own most wealth.

Globally, research suggests that tax reliefs and exemptions cost around 4% of GDP — about a quarter of all revenues collected and yet this vast sum is largely untracked and unevaluated.

This is why GIFT Principle 12 calls on governments to conduct systematic cost-benefit analysis of every relief, exemption and allowance, publish the results, and allow democratic debate on whether these provisions serve the public good. Without that, tax systems are not just failing to reduce inequality: they are actively making it worse.

Transparency as a public good

It is important to see transparency as more than an administrative tool. It is, in itself, a public good.

Information about tax, openly provided, benefits everyone. It allows governments to make better decisions, citizens to hold them to account, and societies to debate the fairness and effectiveness of their fiscal systems.

In this sense, transparency is not a zero-sum game. It is a positive-sum process. Governments can gain legitimacy and raise more sustainable revenues. Citizens can gain confidence that the system is fair. International institutions can point to best practices. And societies as a whole can ensure their tax systems serve the common good.

Two big takeaways

In the end, I think there are two core messages from this whole project.

First, the tax system is far bigger and more important than most people imagine. It is not just about raising revenue. It shapes economies. It drives industrial and foreign policy. It manages inequality. It underpins the entire fiscal system. Seen in this way, tax transparency is about the health of the whole political economy.

Second, a good society cannot exist without a good tax system. And a good tax system cannot exist without transparency. Without it, suspicion grows, inequality rises, and democracy weakens. With it, legitimacy strengthens, services improve, and trust between citizens and the state can be rebuilt.

Where we stand

Right now, no country in the world meets the gold standard for tax transparency. Not one. But every country can begin the journey.

The tools now exist. The Principles are agreed. The training programme is available to all, free of any charge. The next step is political will.

Tax transparency is not a technical curiosity. It is the foundation stone of a fair society. And it is time that governments, citizens and civil society recognised it as such.

Taking further action

If you want to write a letter to your MP on the issues raised in this blog post, there is a ChatGPT prompt to assist you in doing so, with full instructions, here.

One word of warning, though: please ensure you have the correct MP. ChatGPT can get it wrong.

Comments 

When commenting, please take note of this blog's comment policy, which is available here. Contravening this policy will result in comments being deleted before or after initial publication at the editor's sole discretion and without explanation being required or offered.