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Post-Truth Goes Global

Posted on December 12, 2016 by Gibson, Stuart

The Oxford English Dictionary, which has chronicled a millennium of linguistic developments, selected "post-truth" as its 2016 word of the year. According to the dictionary, post-truth is an adjective meaning "relating to or denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief." In other words, if people believe something, it does not matter whether that something is true.

The word gained widespread use during the 2016 U.S. presidential election, particularly as it related to statements that defied proof or logic made by then-candidate Donald Trump. The concept remains powerful even after the U.S. election, perhaps best exemplified by the fact that most Trump supporters believe his recent tweet that he won the U.S. popular vote -- which he lost by more than 2 million votes -- when the "millions of votes" he claims were illegally cast are excluded. To Trump's supporters, it is utterly irrelevant that there is no evidence to support his claim. They believe him, and they will not be dissuaded by the facts.

America may now be exporting this concept to other countries, with post-truth thinking on open display at a recent international tax conference in Mumbai, India. The general consensus among tax professionals is that the OECD's base erosion and profit-shifting project represented a triumph by the developed nations of the world in attacking global tax avoidance by large multinationals, without unduly disrupting the established order. While the final deliverables reflected input from the developing world, including the BRICS countries (Brazil, Russia, India, China, and South Africa), those nations did not drive the project or determine the outcomes.

In post-truth India, however, tax professionals hold a different view of that nation's influence on the BEPS project. Mindy Herzfeld, who attended the Mumbai conference, describes how speaker after speaker praised India's leading and outsized role in developing the final BEPS reports. They claimed that many of the final recommendations had been championed by India long before the OECD even began the project. Indian tax professionals who earn their living by helping multinationals structure their affairs to avoid taxes claimed credit for India's leadership in helping the OECD attack global tax avoidance.

An official at India's Central Board of Direct Taxes, Rajat Bansal, claimed in Mumbai that the negotiation of a new India-Mauritius tax treaty predated the BEPS project's tackling of treaty abuse. While acknowledging that the BEPS project may have put pressure on the countries to conclude the treaty, Bansal seemed to dismiss the key role that the BEPS project played in how the new treaty was structured.

The BEPS project has called for nations to resolve tax disputes through binding arbitration. Yet India remains steadfastly opposed. In a textbook display of post-truth thinking, and apparently oblivious to India's huge backlog of mutual agreement procedure (MAP) cases and the country's notorious inability to resolve disputes in a timely manner, Bansal questioned why binding arbitration is needed "if we can get the job done with MAP".

How did we get to a point where so many people have developed such a distrust of traditional sources of news and truth? Frans Vanistendael examines the economic and educational gap between members of the political establishment and the citizens they represent who have been left behind by the new economy. He casts the current situation in terms of professed moral superiority and inferiority, and suggests a way forward that lifts the "underclass" while preserving the essential features of democratic government.

Stuart Gibson is editor of Tax Notes International.