Ms Sarah Perret:

Yes. I shall give a bit of background on inheritance and estate taxes in OECD countries. The majority of OECD countries levy inheritance, estate and gift taxes. As many as 24 out of 38 OECD countries levy inheritance, estate and gift taxes. As I said earlier, 20 of those 24 countries levy inheritance taxes on beneficiaries and the remaining four levy what we call estate taxes on a donor's overall estate. What we have noticed - this is in our report - is that despite the fact that a majority of countries levy these taxes, they actually represent a small source of revenue in the countries where they are levied. On average, in the countries that levy inheritance, estate and gift taxes, those taxes account for 0.5% of total tax revenue, which means it is a really small source of revenue. Plus there are only four countries where revenues from these taxes exceed 1% of total taxation. Those countries are Belgium, France, Japan and Korea. What that shows - it is the same story with wealth taxes - is that many of these countries have these taxes but that the tax base is very narrow. It is narrow because some countries have very high tax exemption thresholds, and especially for direct descendants. An extreme example is the United States, where the threshold is more than $11 million for children. Below that figure, a person does not owe any estate tax. Obviously, many countries have lower thresholds. Some countries have high thresholds, which means that a lot of wealth can be transferred to children tax-free. There are also many assets that benefit from preferential tax treatment or are completely exempt. The main ones are business assets, main residences, pension savings and life insurance policies, so, again, the tax base is narrowed.

Another major factor is that there are significant tax avoidance and evasion opportunities. Obviously, the fact is that there are exemptions and reliefs that favour tax avoidance. Also, in many countries, giving during the donor's lifetime is tax favoured. There are often these renewable tax-free gifts that one can make. The way one does it is start early in one's life giving to one's children and enjoy these gift tax exemption thresholds. There are also additional avoidance opportunities through a trust or charitable bequest. Obviously there is evidence of tax evasion as well. I would say that in general those are taxes that need to be designed better because these taxes, in addition to raising very little revenue, are not as progressive as they could be. In some cases, they can be regressive.