Corporate taxes

The ‘gig economy’ has grown and risen up the policy agenda in recent years. The associated growth in people working through their own businesses and in work happening through platforms highlights difficult questions about when to have boundaries in the tax system and where to put them.

Taxes are often the subject of debate; that is as it should be. But those debates need to be well-informed to produce sensible policy outcomes.

The tax system discourages employment, investment and risk-taking. It needs reform, say Stuart Adam and Helen Miller.

At this event we discussed findings from a new report, funded by the Nuffield Foundation, which sets out the problems with the current tax treatment of business owners’ incomes and investment and discusses how the government could take practical steps towards fixing them.

Boris Johnson has today announced that a Conservative government would not go ahead with the planned reduction in the rate of corporation tax from 19% to 17% next April.

Tax is just one policy lever among many others, yet our tax system affects the UK’s industrial structure in many ways. We should give consideration to these effects when designing tax policy. When we deviate from tax neutrality to steer the industrial structure, three questions need to be addressed. Is there a good reason to change a market outcome? Is tax the right tool? And can we design tax solutions where benefits outweigh costs? Removing current distortions from our tax policy is often much more sensible than layering another distortion on top.

This presentation was given at a CIOT/IFS debate on 'Taxing commercial property – time to tweak business rates or replace with a land value tax?', held in London on 18 June 2019.

This presentation was given at a seminar at the London School of Economics on 19 November 2018.

This presentation is one of a series on the economics of tax policy.

This presentation is one of a series on the economics of tax policy.