Tax policy for the modern economy

Tax policy for the modern economy


In terms of effective tax policy I guess there’s three aims of tax policy and tax: one is to raise revenue and the
revenue needed for essential public services; one is fairness
in how that’s raised and I think then the final one is simplicity and clarity
in the system of tax and they are they’re all interrelated I think what we
see at the moment and I guess is another principle of tax policy would be
ensuring that what taxes is levied against matches the nature of the economy so I think we’re seeing so much transformation of the economy through technology whether that’s creating kind of gig culture that’s changed employment
and employment tax or transformation of big digital firms
which we’re seeing an impact in terms of corporation tax, they’ve sort of raised
fundamental questions about whether we’re taxing the right things, you know
we tax jobs, we tax a property, we tax profits, we tax sales. What’s the right balance in the modern economy? And I think some of those issues need every so
often to be debated from first principles and I guess that’s the final
point about good tax policies: having a fundamental debate and engaging
people in discussion rather than kind of going straight in whether you know a new
set of budget proposals. At the moment we have a lot of different tax incentives
and tax reliefs but no real clear statement from government, who agreed with
society about what, say the five, the five aims of those are, what we want to achieve? And I am here we would say that there’s a good case for saying that tax
incentives should be targeted on things like promoting exports, particularly as
we leave the EU, promoting innovation and maybe promoting a change in investment
models and in promoting impact investment but we should have a debate and identify
the small number of priorities that the tax system is seeking to incentivise and I think it came to then simplify the rest and
just focus on those few targeted reliefs. I personally get quite passionate about
evaluation and particularly evaluating tax relief and evaluating tax relief
alongside other policy instruments. I used to work in government before I work
for Grant Thornton and one of my frustrations was that as a civil servant
in government it was very, very difficult to try and conduct an evaluation of, in
my case, both tax relief for investment in venture capital and direct, if you like, grant funding investment in venture capital. The way government machinery works,
there’s lots of silos, the Treasury can be very protective about tax policy so
it was really difficult and you know nigh on impossible to properly evaluate those different interventions. They both cost taxpayers money but to look at which
ones works best so I think if we can move to a position where we evaluate tax
relief more regularly, we’re really clear about the aims and then we look to see
whether those are working and what the best instruments are, that would be a
major step forward. you


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