Tax systems have evolved a great deal over time in response to evolving economic and social conditions, but when we consider how different the world looks today from the time taxation first entered into our daily vocabulary, we need to ask: have tax systems really kept pace with the transformation we’ve seen in other aspects of our lives?
The world around us has changed dramatically in terms of regulatory change, technological innovation, globalization, new business and consumer demands and new ways of living. We see this becoming even more apparent now, as we consider the digital economy and the emergence of previously unseen types of business.
The evolution of tax systems, meanwhile, has simply not kept pace, and we are entering a pivotal time for taxation as policymakers start to think about tax in different ways. Some have introduced new models to meet modern demands—the BEPS project is an example of this effort. However, tax is still consistently conceived of and collected across three key areas: corporations, individuals and consumption.
Impact on corporate tax
When it comes to corporate tax, we have seen it become a smaller part of the tax base in recent years, and some policymakers are asking whether it should be replaced by other taxes. And when it comes to taxation of individuals, various changes have been made to try and deal with perceived problems of inequality and inter-generational fairness. I think a deeper question remains to be addressed as to whether how and what we tax is fit for our present context.
Considering the global impact of tax system changes
It is time to rethink tax in a holistic way—to consider how tax systems really work, and what we need from them in a globally connected world. This is a big thing to think about, and, I believe, the modern context demands that it be considered through a global lens as opposed to a national one. Similarly, it is a big conversation to have, and I believe this discussion must be a dialogical one—bringing in a wide range of voices and perspectives to the issue.
Now, more than ever, there is a responsibility on all stakeholders, and on policymakers in particular, to design tax policies that are good for society. That means thinking about economics, yes, but it also means creating policies that support the desired behaviors and outcomes we want to see.
A new tool to support the discussion around what to Tax
“What to tax” is a simple question, which, we know, is often the most challenging type of question to answer. I believe the attempt to address it is an important task in and of itself. The Responsible Tax Project will be embarking on bringing multiple answers and multifaceted views to this question through the development of a new publication, aptly titled, What to Tax. Here, we will convene different voices, which together, can reveal new insights to inform policymakers as they work to shape the future of tax.
I am excited to work on the What to Tax publication, and to see the perspectives of our authors. Of course, this piece is just one contribution to the ongoing discussion around Responsible Tax in today’s world. An important part of this conversation will happen here in our Responsible Tax forums and within our online communities. To this end, I welcome your contributions to the discussion—now, and in response to the publication later this year. Thank you in advance for bringing your voice to the table.
Areas of expertise Operating Effectiveness Pensions and Retirement Funds Tax Tax planning Tax strategiesEducation and qualifications MA St Hugh's College, OxfordAccreditation HM Inspector of TaxesProfessional Associations Forum for Tax Professionals Tax Policy Committee of the ICAEW