02-20-06,9:21am

“The achievement of concrete targets –leading to a transformation of the social debt underdeveloped countries have accumulated– would require that many resources be mobilized and reallocated; however, under current fiscal administrations and policies such a transformation is not possible.” said Dr. Luis Francisco Suero, one of the most important theoreticians of the tax system in Cuba. He participated in the Eight Conference of Economists on Globalization and Development Problems.

In his presentation “Globalization, International Tax Systems and ALBA” –which he gave jointly with the National Economic Sciences Award winner Joaquin Infante Ugarte– Dr. Luis Francisco Suero proposed the drafting of a new international fiscal agreement based on financial concepts that better accommodate aspirations favouring a more just world order.

In his thesis he goes into a deep analysis of how important tax systems are in all current Latin America and European integrationist plans. He also referred to recent national policies being implemented in this regard, to come to the conclusion that the balance resulting from the taxation model is negative because it implies a progressive removal of the tributary system created to support the concept of well-being in the midst of last century; this would be swept away by neo-liberal globalization.

In his work Dr. Luis Francisco Suero states that present tendencies range from a reduction in taxes to capital generating sources –which protects powerful nations– to a progressive reduction of taxes on rent while increasing indirect obligations or new payments to the consumer, thus increasing the taxes to that strata of society with lower incomes.

The philosophy of reducing the participation of the state in the management of national economies, the great mobility of capital and its dislocation through the so-called fiscal paradises, has permeated some of the worst aspects of neo-liberal capitalism in the tax system.

“Instead of looking for proper formulas to tax capital incomes, the neo-liberal practice tends to favour tax exemption, thus increasing revenues on factors with lower mobility, mainly jobs, or more precisely workers,” said Dr. Luis Francisco Suero who works at the Cuban Tributary System.

These reactionary reforms are being promoted by the Organization for Economic Cooperation and Development (OEDC) where the interests of exporting countries prevail. These policies are, in addition, inefficient given the challenges posed by technologic aspects involved and by the participation of transnationals, whose powerful tax planning systems are designed to evade the tax payments.

Particularly in the case of the Latin American region it should be added that most of the integrationists projects have not gone any further than implementing inadequate customs alliances or creating limited free trade areas for which no new solutions are in sight, not to mention higher stages of cooperation like monetary and economic union which would require a more harmonized taxation system for the area.

What prevails is a harmful rivalry between Latin American countries based on tax incentives to attract foreign investment, which in the long run is harmful for all because such policies erode the taxable basis of every single nation, said Francisco Suero.

In regards to the Latin-American tax administrations another aspect to be overcome would be the marked influence of political thinking prevailing over the economic continuity so that, every time a new government seizes power, it does not imply a complete dismantling of the preceding tax systems and reforms.

Based on all these arguments the authors defend the idea of beginning to discuss the need for approaching taxation in a co-operative, supportive and harmonized way that promotes the principle of equity in taxation as the Bolivarian Alternative for the Americas initiative proposes.

That new taxation system would require mechanisms, such as the creation of new harmonized taxation entities, a common budgetary fund for member countries, instruments for integrated management, to prevent transnationals from evading taxation and to adapt different models to avoid double contribution and the different ongoing collaboration agreements, all in accordance with the peculiarities of each country.

“In order to put this new paradigm into practice, unity and political consensus are of pivotal importance, said the specialist, who added that, on the other hand, this should not prevent us from initiating debates and thinking of new definitions for another taxation model.”