Better taxation and public expenditure

A new rhythm in international taxation when facing classic problems

In recent years, the tax world is being shaken at an international level. Historically the negotiation and entry into force of bilateral double taxation conventions involved processes that took a long time, and the discussion periods were even longer in the case of adopting multilateral treaties. Nowadays, everything seems frenetic. The previous frantic experience of the OECD now seems to have infected the United Nations, where multiple processes are running in parallel to meet several self-imposed deadlines – with quite a tight agenda1.

It looks like that there is no longer a quiet space to pause and reflect on the delicate matters of how to tax and spend better in the current days. Also, in many countries the rapid sequence in passing Acts that affect the tax and expenditure systems reveals somehow this agitation. Due to that accelerated pace, the volatility of the financial and tax legislation obviously ends up harming legal certainty, with unexpected changes or too quick successive ones, sometimes without leaving enough room for adaptation. Sadly, all these beats have an impact on social acceptability of the norms and can ultimately delegitimize the value of tax rules.

In times where some relatively unexplored ways are sought to influence the taxpayers’ behaviours, with a view to promote tax compliance (e.g. through nudging when filing electronically) or to perform certain specific non-revenue goals (e.g. by making more or less costly the available choices); the debate among tax experts should also pay attention to the tax legislators and administrators’ behaviours.

At this point, a careful legislative technique should matter not only domestically, but also internationally. Ideally, it should allow the fullest possible intervention of tax-paying citizens’ representatives in the legislative procedures and thus reinforce the democratic values. The risk of societal tax disengagement may be greater when certain fiscal strategies are seen as a threat to the social compact. And this cannot be avoided only by considering miscellaneous inputs from diverse stakeholders, despite well intended open public consultations. Or by trying to change the legal basis to follow easier legislative procedures in an attempt to disguise tax measures included in a legal framework apparently set for pursuing other main goals. This is an undesired path that inevitably leads to conflict. In the European Union, there is a trend denoting a departure from the traditional legal basis that requires unanimity for the adoption of financial measures. For instance, the Article 122.1 of the TFEU has been used in the area of energy due to difficulties in the supply of certain products, to establish a temporary solidarity contribution in Regulation 2020/1854; and Article 192.1 has been the basis for the adoption of Regulation 2023/956, which establishes the Carbon Border Adjustment Mechanism. In this ambit, it is worth mentioning the appeal lodged on 8 August 2023 by the Republic of Poland against the European Parliament and the Council of the European Union2.

At the end of the day, the question is not only about timing and empowerment, or finding shortcuts, but also about the original connection between revenue and expenditure.

Taxing and collecting: more or better?

In the past, many tax policy debates, to a certain extent, were focused on taxing more, for example, to overcome the financial crisis in 2008 (even considering the temporary revenue raising potential of environmental taxes until they had reached their purpose – and consequently counting on the eventual zero amount collected). Lately there has been a strong push to mobilize domestic resources for the financing of the sustainable development goals. The search for innovative mechanisms started with the Addis Abeba Action Agenda to support the 2030 Agenda. However, essentially, the initial approach was to deal with the existing tax gaps, both at the creation of the laws and at their application level.

In the European Union, the Juncker Commission promoted the initiative “collect more, spend better” in the route towards a sustainable Europe by 2030. As the European Commissioner Neven Mimica explained: “Collect more focuses on the efficiency, effectiveness, fairness and transparency of the tax systems at the national and international levels. This includes closing tax gaps arising from poor tax policies and from weak tax collection and enforcement under existing policies. Spend better is about improving the effectiveness and efficiency of public spending, with a particular focus on subsidy programmes, public investment, public procurement and debt. Better management in these areas can be as effective in increasing fiscal space as receiving additional resources” 3. Indeed, these combined strategies can be today reinforced thanks to the recent digitalization processes in the e-Government initiatives that grow worldwide and affect tax authorities. Although when implementing the most powerful technological means, policymakers and managers should bear in mind the relevance of the principle of proportionality and protect human rights 4.

In order to spend better, one should aim to tax better as well. A review of the latest international developments shows that the quantitative idea of collecting more is still at the very centre of many coordinated national efforts, while there could be an opportunity to make some additional qualitative progress.

Taxpayers are often seeing how broadened tax bases, tax increases, imaginative pseudo-taxes, new levies, and/or extraordinary contributions emerge on the roadside of the typical tax principles. The fight against illicit financial flows, or the challenges to solve the issue of the informal economy, are reasonable arguments. But constitutional limits, like the prohibition of confiscation, should always be respected.

Evidently, the aim to increase the revenues to meet the expenditure and cover the public needs (setting aside corruption) is aligned with the desired budgetary balance. However, trying to close the regulatory gap could make sense once there is no recovery gap, or has been minimized as much as possible.

With such normative developments going on, in the meantime, there are so many tax claims, already assessed, that are not being collected, due to a blatant lack of cooperation among tax authorities in different countries. Probably, many taxpayers would prefer not to pay new or more taxes and would rather ask their tax administrations to collect the owed/outstanding tax debts.

A revivified interest in mutual assistance for the collection of tax claims?

In the Sevilla Commitment, adopted as a result of the 4th International Conference on Financing for Development 5, there is a call for introducing a higher dose of progressivity in the tax systems and a steady move to strengthen the existing initiative – arranged by the OECD and the United Nations Development Programme, Tax Inspectors without Borders with a version 2.0. Both policy strategies are understandable in a context of rising inequalities, but maybe it would be wise to take a further step. We believe that a new supplementary initiative on Tax Collectors Without Borders could be established to improve the enforcement 6.

A few months ago, the Committee of Experts on International Cooperation in Tax Matters showed a renewed interest in mutual assistance for the collection of tax claims 7. In a similar fashion, the Intergovernmental Negotiating Committee established by the United Nations General Assembly to draft a United Nations Framework Convention on International Tax Cooperation and two early protocols, considered this topic during its First Session in August 2025 8. The developing countries pointed out different problems often faced by them: lack of capacity, possibility to enter reservations to the international instruments, costs of the assistance, trust, types of taxes covered, and lack of reciprocity, among others. Despite these handicaps, better collection requires a deeper degree of international tax cooperation.

Additionally, the experience of the European Union Member States, relying on the exchange of information as a basis, appeared to be enticing to developing countries. However, an in-depth study of the effectiveness of Directive 2010/24/EU 9 uncovers certain areas where some adjustments would be convenient in this respect, especially if data-oriented decision making is required and the real number of debts pending collection and their total amount (e.g. regarding VAT) cannot be well-known. The role of statistics and the dialogue between tax enforcement officials, also with inspectors, is of paramount importance. The supranational environment may serve as an inspiration for other regional groupings wishing to advance in this field. Of course, sharing the best practices among them would be clearly beneficial for a proper implementation of this ‘last mile’ of mutual administrative assistance 10. 

International cooperation and supervision

One could envisage that the type of taxes covered by the mutual assistance for the collection clauses is expected to expand in scope. As a sample, let us think about the proposed explicit connection of the widely endorsed taxes on tobacco and alcohol with the financing of health systems. In our view, in the future, with respect to the collected amounts, even taking into consideration an international scenario, the temptation of earmarking should be avoided, as it could entail complexity and lead to a lesser control of the funds as compared to a well-established budgetary process.

To ensure that the necessary resources are collected and spent transparently and efficiently, supreme audit institutions and parliamentary oversight are needed (in particular, in the case of tax benefits/expenditures). In turn, this will call for a closer international cooperation among these actors as well. And, eventually, even deliver tax refunds where appropriate in the light of the circumstances of the case.
The sound reconfiguration of the (inter)national financial architecture should strengthen not only tax systems, but simultaneously the public sector audit, as a part of public financial management and good governance, precisely to allow Parliaments and citizens to hold governments accountable for their tax behaviour.
 

• 1

  See the previous entry in this blog, https://legalblogs.wolterskluwer.com/international-tax-law-blog/united-nations-tax-framework-convention-terms-of-reference-for-an-inclusive-and-effective-international-tax-cooperation-critical-issues/ Grau Ruiz, M.A.: The United Nations Framework Convention on international tax cooperation in the making: debate and approval of its terms of reference, Crónica tributaria, No. 195, pp. 37-65 https://cronicatributaria.ief.es/ief/ct/index.php/cronica-tributaria/article/view/2398/3020

• 2

  Grau Ruiz, M.A, “La coordinación financiera como prerrequisito para la protección ambiental eficaz en un marco de economía circular” [Financial Coordination As A Prerequisite For Effective Environmental Protection In A Circular Economy Framework], Actualidad Jurídica Ambiental, No. 162, 15 December 2025. DOI: https://doi.org/10.56398/ajacieda.00455

• 3

  European Commissioner Neven MIMICA, Side Event on International Support to Domestic Resource Mobilisation, Addis Abeba, 15 July 2015. http://ec.europa.eu/ commission/2014-2019/mimica/announcements/side-event-collect-more-spend-better-contribution-2030-agenda-sustainable-development-new-york_en [18 October 2015]; https://www.un.org/en/development/desa/usg/statements/mr-wu/2015/09/a-contribution-to-the-2030-agenda-for-sd.html

• 4

  A review of the actual options can be found in Grau Ruiz, M. A., “Towards a Better Protection of Human Rights through the Use of AI and Related Technologies in Budgeting and Auditing of Public Expenditure”, Deusto Journal of Human Rights, No. 14, 2024, pp.195-196. https://doi.org/10.18543/djhr.3194.

• 5

  The 4th International Conference on Financing for Development (FfD4) has been held from June 30th to July 3rd, 2025, in Seville, Spain.

• 6

  For a detailed explanation of the tax impact of the Seville Commitment, see Grau Ruiz, M. A., “Tax commitments in the Compromiso de Sevilla: critical issues in financing for development”, Review of European and Comparative Law, Vol. 62, No. 3, pp. 179-196. On the possible supplement to TIWB, p. 193. See for a Latin American perspective, the Master thesis presented by J.R. Rodriguez Torres, “Implementación de la asistencia recaudatoria internacional en el Perú. Evolución normativa y análisis comparado”, Universidad Complutense de Madrid, 2025, p.71 available at https://hdl.handle.net/20.500.14352/128959

• 7

  Assistance in the collection of tax debts was one of the areas covered in the report (E/C.18/2025/CRP.13) presented by the Co-Coordinators of the Subcommittee on Increasing Tax Transparency, José Troya and Ms. Mensah. Committee of Experts on International Cooperation in Tax Matters. Report on the thirtieth session (New York, 24–27 March 2025). Economic and Social Council Official Records, 2025, Supplement No. 25A. E/2025/45/Add.1-E/C.18/2025/3 Available at https://financing.desa.un.org/sites/default/files/2025-07/2507467E.pdf

• 8

  See the recording available at https://webtv.un.org/en/asset/k1s/k1sba0m3fg

• 9

  Paul Van der Smitte in the work for his PhD thesis at the University of Utrecht offers useful guidelines to improve the European Union framework. See also Van der Smitte, P, “Effective EU Tax Collection: A Utopia?”, Bulletin for International Taxation, Vol. 68, No. 6/7, 2014, pp. 387-389; DOI: https://doi.org/10.59403/31sfc5a, and “Payment Thinking: A New Tax Collection Strategy or Old Wine in New Bottles?”, Bulletin for International Taxation, Vol. 69, No. 12, 2015, pp. 747-751; DOI: https://doi.org/10.59403/1f01sxr

• 10

  Paul Van der Smitte in the work for his PhD thesis at the University of Utrecht offers useful guidelines to improve the European Union framework. See also Van der Smitte, P, “Effective EU Tax Collection: A Utopia?”, Bulletin for International Taxation, Vol. 68, No. 6/7, 2014, pp. 387-389; DOI: https://doi.org/10.59403/31sfc5a, and “Payment Thinking: A New Tax Collection Strategy or Old Wine in New Bottles?”, Bulletin for International Taxation, Vol. 69, No. 12, 2015, pp. 747-751; DOI: https://doi.org/10.59403/1f01sxr