draining development.pdf - Khazar University

Accounting for the Missing Billions 273Figure 9.1. Corporate Tax Rates, Initial Results, 1997–200840383634Average tax rateWeighted average basedon GDP of countryAverage tax rate in the EU 15Average tax rate in the OECDAverage tax rate in non OECDpercent3230Average tax rate in largecountriesAverage tax rate in smallcountries28262422Average tax rate in countrieswith high GDP per headAverage tax rate in countrieswith low GDP per headAverage tax rate in countrieswith high state spendingAverage tax rate in countrieswith low state spending201997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Source: Author compilation, based on data of Tax Tools and Resources (database), KPMG, Zug, Switzerland, http://www.kpmg.com/Global/en/WhatWeDo/Tax/tax-tools-and-resources/Pages/default.aspx.This story is not repeated elsewhere. The data for large and smalljurisdictions do, for example, show a persistent gap in tax rates betweenthese two groups, the extent of which marginally increases during theperiod. The trend in rates seems clear: smaller jurisdictions (those withpopulations of less than 15 million people) would appear to wish to createcompetitive advantage by having lower corporate tax rates.This trend is also found by comparing jurisdictions with high GDP perhead and jurisdictions with low GDP per head. In this case, it is, however,clear that the margin is closing: a level playing field is being created betweenthese sets of jurisdictions. This is not surprising: there is significant overlapbetween the high-GDP jurisdictions and the OECD countries.