Few commentators believe the UK government’s policy framework for achieving its target to reduce greenhouse gas (GHG) emissions to net zero by 2050 is sufficient. There is a strong case for a carbon or energy tax, but from a social policy perspective such taxes raise distributive concerns. Yet, as this chapter shows, taxation of carbon already exists in the UK in a range of fiscal instruments that affect the cost/price of GHG emissions. These have emerged uncoordinated with little concerted analysis of their distributive impact or the adequacy of benefit payments that mitigate impact. The chapter shows existing UK carbon taxation to be highly regressive with mitigation efforts wholly insufficient, particularly with respect to the lowest-income decile households. What is required, it is suggested, is a re-consideration of domestic energy taxation encompassing the development of fully worked through compensatory mechanisms, including universal services delivering basic needs.
With tax issues high on the political agenda, this broad-based edited collection fills a significant gap in both the tax and social policy literatures. Bringing together disparate debates and based on a wealth of research, it provides a detailed analysis of how tax and social policy interact with each other and the role of taxation as an instrument of social policy influencing redistribution and behaviour.
The book’s 15 chapters guide readers through the key interactions and the challenges posed by the complex interplay of tax and social policies across the main policy domains. Together, they consider the full range of fiscal resources, including much that has remained part of the hidden wiring of taxation. Wealth, consumption, environmental and income taxes are examined, as is the impact of local and indirect as well as direct taxes on individuals, families, communities and societal wellbeing. Each chapter also considers how analyses might be combined and policy options developed for more effective delivery and impact. Individually and conjointly, they raise searching questions about the ways that taxes influence behaviour and how taxation might be used to work in tandem with social policies to tackle structural inequalities.
With its interrogation of existing sources as well as new research, it is essential reading for both social policy and tax analysts and will stimulate debate, policymaking and further research.
The tax system is not simply about raising revenues; it is also about distributing favours and picking winners. Many of the ‘penalties’ but also rewards of the tax system over the past few decades have been distributed disproportionately to big business, coinciding with increases in other types of corporate welfare. This chapter focuses on the issue of corporate taxation, but it also looks at how tax shares and tax benefits are distributed unevenly, not just between citizens and corporations but also between different types of business.
The purpose of this chapter is to explore the social policy implications and politics of employment-related taxes with respect to both paid employment and self-employment. Taxes levied on paid employment, including both income tax and National Insurance contributions, represent a major source of revenue for the British state, comprising more than 40 per cent of the overall tax revenue of the UK government – well ahead of value added tax, corporation tax and any other remaining sources of revenue – while also serving as a key tool for redistribution. As revenue-raising mechanisms, they also pose fundamental questions around fairness, justice and effectiveness, both in comparison to other types of taxation and when differences in tax regimes depending on employment status are considered.
Tax and welfare are both aspects of fiscal policy, yet a failure to treat them as such has hindered attempts to promote either economic prosperity or fairness. Over the decades, governments have experimented with integrating the two systems – negative income tax on the Right and more progressive forms of tax credit on the Left – but neither has made a significant impact on overall inequality. Campaigns for radical schemes such as Basic Income have again been generating both enthusiasm and criticism in recent years. Has the public appetite for such schemes changed as a result of the pandemic, the cost-of-living crisis and, very lately, the emergence of a more right-wing turn by the latest Conservative governments? The chapter concludes with a call for greater transparency, analysis and public debate.
Fiscal welfare and tax expenditures are tax reliefs created by governments to run public policies through taxation rather than through public spending programmes. Yet their impact on individuals, the economy and broader society is still remarkably neglected. Left hidden, if not secret, they are not scrutinised and analysed along with direct public spending. As the chapter shows, their UK scale is considerable, greater than in most countries, and the costed policy-motivated reliefs alone probably exceed 8 per cent of gross domestic product.
After introducing the concepts and their definitions, the available UK evidence that HMRC has at last begun to reveal is considered. While many more tax reliefs are now being costed, there is very little analysis, especially of their distributive and behavioural impact. Yet most income tax reliefs and many others are means-enhancing and confer greater benefits on those liable to higher rates of tax: this is in marked comparison to social security, which has become increasingly means-tested for those of working age. Failure to take account in policymaking of this reinforcement of inequality in society and other behavioural consequences serves to undermine, if not sabotage, public spending objectives with considerable political as well as social impact. In addition, the benefits of tax reliefs to employers and institutions such as pension funds, building and other industries have received little scrutiny. Possible policies to achieve greater transparency, accountability, equality and fairness are considered.
This chapter outlines how attention has moved since the 1980s from challenging gender inequality within taxation itself to examining how the tax system works to increase or decrease a variety of gender inequalities in society. After a brief look at independent taxation, the defining gender issue when Taxation and Social Policy was published in 1980, the chapter introduces Gender Responsive Budgeting (GRB), a movement to democratise and make budgets more gender sensitive. The main principles of the GRB approach are outlined, including why gender responsiveness across a range of inequalities should be the aim rather than gender blindness, and its application examined both internationally and through its specific focus within the UK. These GRB principles are then discussed by applying them successively to the societal functions of tax and some specific UK taxes.
In 1980, housing policy in the UK was described as ‘a dog’s breakfast’ that could not be rationalised either in terms of declared government housing objectives or the more general aims of the fiscal system. This chapter explores the extent to which this situation has changed in the 40 years since these remarks were made. In this chapter, we focus on the taxation-related tools used by governments in creating the national housing supply. The use of general taxation is key to the provision of direct public revenue to support these housing objectives. However, governments also make use of varied tax interventions that are directly housing related, including providing a variety of tax reliefs and applying a mix of various taxes specifically on housing, including stamp duty, council tax, capital gains tax, inheritance tax, income tax and value added tax. We will touch on how each of these are used in this chapter.
This brief introductory chapter sets the scene for the rest of the book. Starting with an account of the book’s inspiration, an earlier volume of the same title edited by Cedric Sandford, Chris Pond and Robert Walker published in 1980, it provides an overview of its aims and central concern, the importance of and need for considering taxation and social policy together. It also provides a preview of the book’s next fourteen chapters, the wide range of policy domains and tax issues they address and the ways they open up debate about the role of taxation as an instrument of social policy and its distributional and behavioural significance.
Pensions and pensions policy represent one of the major areas where taxation and social policy interact. Decisions impact on the current and future living standards of most individuals, involve substantial and growing state expenditure, raise questions of equity and efficiency, and grapple with the issue of the long-term sustainability of current approaches given demographic trends.
This chapter examines the linkages between pensions and the taxation system in the UK and traces their evolution over time. Alongside an overview of the current UK pension system, and a review of the socio-economic policy context within which pensions policy is formed, it focuses on the current suite of tax-based incentives for occupational and personal pension savings and highlights the very significant tax-advantaged position provided for this form of long-term savings. The chapter concludes with a series of key issues that are likely to arise in the pensions–taxation policy space in the years ahead.