Tax Policy Post COVID 19 Pandemic
Rita de la Feria
Professor and Chair of Tax Law, University of Leeds | IR Fellow, Oxford University Centre for Business Taxation | Advisory Panel, UK Office for Budget Responsibility
My key predictions - and one appeal - for tax policy post pandemic, based on the presentation I gave yesterday (Apr 29, 2020) at WIN (Women of IFA) European seminar, part of the series "WIN in conversation with..."
1. Big changes are likely. Tax reforms are more likely after shocks, and exogenous pressures, such as the pandemic, decrease political economy resistances.
2. Tax reform will be guided by two priorities: need for additional revenue, and boosting economic growth. This will most likely entail targeting different taxes for each of these aims.
3. To increase revenues, indirect taxation and PIT / wealth taxes will be used. VAT is an easy way to increase revenue; political economy obstacles to excises are low; and pressure to tax higher incomes will grow.
4. To boost the economic, CIT will be used. Nationally, incentives and breaks (probably conditional) more likely. At international level, more unilateral action and increased competition for FDI, with likelihood of international agreement decreasing.
These are not outcomes that I would necessarily endorse. Some can be good, others terrible. Regardless though, my key message is this:
5. Reform is likely to happen, so if we want good reform, we need to speak up now. This is the time for tax policy experts to stand up.