Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Does tax policy fit in the portfolio of COVID-19 responses?

Does tax policy fit in the portfolio of COVID-19 responses? Tax policymakers are currently navigating a path through a delicate dialectic of macro- and micro-level policy responses to the economic dislocation of the COVID-19 pandemic. The purpose of this paper is to examine initial tax measures that are aimed at helping taxpayers needing liquidity, solvency and income support.Design/methodology/approachThis study undertakes a review of key tax policy responses of six jurisdictions across the globe that have similar tax regimes and virus mitigation strategies (albeit with different outcomes). Key initiatives implemented from February to April 2020 by Australia, Canada, New Zealand, Singapore, South Africa and the UK are examined.FindingsThis study indicates that tax concessions are a crude and mostly ineffective way of assisting individuals and enterprises in difficulty. In the longer term, if the crisis prompts desirable reforms such as extending the recognition of tax losses, the income tax system will emerge fairer and more efficient.Practical implicationsAn investigation of the short-term reforms announced relating to asset write-offs, tax deferral, tax losses and goods and services tax/value-added tax rates in light of the liquidity, income support and stimulus objectives shows that in some cases the policies may have been misguided. The findings can be used by policymakers as the basis for designing better targeted alternative non-tax responses.Originality/valueJurisdictional responses to tax policy reforms during a modern period of significant economic dislocation have yet to be documented in the literature. Specifically, this paper highlights the limitations of tax policy initiatives as a response to financial hardship. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Pacific Accounting Review Emerald Publishing

Does tax policy fit in the portfolio of COVID-19 responses?

Sadiq, Kerrie; Krever, Richard
Pacific Accounting Review , Volume 33 (2): 9 – Aug 10, 2021
Download PDF
9 pages

Loading next page...
 
/lp/emerald-publishing/does-tax-policy-fit-in-the-portfolio-of-covid-19-responses-0CjmJ2zLEr
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0114-0582
eISSN
0114-0582
DOI
10.1108/par-08-2020-0119
Publisher site
See Article on Publisher Site

Abstract

Tax policymakers are currently navigating a path through a delicate dialectic of macro- and micro-level policy responses to the economic dislocation of the COVID-19 pandemic. The purpose of this paper is to examine initial tax measures that are aimed at helping taxpayers needing liquidity, solvency and income support.Design/methodology/approachThis study undertakes a review of key tax policy responses of six jurisdictions across the globe that have similar tax regimes and virus mitigation strategies (albeit with different outcomes). Key initiatives implemented from February to April 2020 by Australia, Canada, New Zealand, Singapore, South Africa and the UK are examined.FindingsThis study indicates that tax concessions are a crude and mostly ineffective way of assisting individuals and enterprises in difficulty. In the longer term, if the crisis prompts desirable reforms such as extending the recognition of tax losses, the income tax system will emerge fairer and more efficient.Practical implicationsAn investigation of the short-term reforms announced relating to asset write-offs, tax deferral, tax losses and goods and services tax/value-added tax rates in light of the liquidity, income support and stimulus objectives shows that in some cases the policies may have been misguided. The findings can be used by policymakers as the basis for designing better targeted alternative non-tax responses.Originality/valueJurisdictional responses to tax policy reforms during a modern period of significant economic dislocation have yet to be documented in the literature. Specifically, this paper highlights the limitations of tax policy initiatives as a response to financial hardship.

Journal

Pacific Accounting Review – Emerald Publishing

Published: Aug 10, 2021

Keywords: Tax policy; Tax reform; COVID-19; Tax concessions

References

  • Revisiting tax losses
    Abhayaratna, T.; Johnson, S.
  • Australia’s future tax system: report to the Treasurer, Canberra, December (Henry Tax Review)
  • Who really benefits from consumption tax cuts? Evidence from a large VAT reform in France
    Benzarti, Y.; Carloni, D.
  • Final report on the tax treatment of losses, Canberra, April
  • Federal treasurer Josh Frydenberg calls for states to put more cash towards COVID recovery
    Chapman, A.
  • Report from the Commission to the Council and the European Parliament – Experimental application of reduced rate of VAT to certain labour-intensive services (COM (2003) 309 final), 2 June
  • Blueprint for reform of VAT rates in Europe
    De la Feria, R.
  • Discretionary fiscal responses to the COVID-19 pandemic
    Devereux, M.; Güçeri, İ.; Simmler, M.; Tam, E.H.F.
  • Asymmetric treatment of tax losses
    Freebairn, J.
  • Australia needs a six-month GST holiday
    Gross, I.
  • Government considering bringing tax cuts forward as part of coronavirus economic response
    Hayne, J.
  • New Zealand passes loss carryback law to provide pandemic relief
    Hoke, W.
  • IRAS e-Tax guide, income tax: enhanced carry-back relief system
  • Will GST reform make the poor poorer and the rich richer?”, UNSW newsroom, 16 July
    Lo, D.
  • Tax measures in response to the COVID-19 pandemic
    Marais, A.
  • The impact and implications of COVID-19: an Australian perspective
    O’Sullivan, D.; Rahamathulla, M.; Pawar, M.
  • Treatment of tax losses: Lessons from the Canadian experience
    Poddar, S.; English, M.; Head, J.G.; Krever, R.
  • Radical incrementalism and trust in the citizen: Income security in Canada in the time of COVID-19
    Robson, J.
  • Strategies and challenges amidst COVID-19 facing South Africa and neighbouring countries
    Roeleveld, J.
  • Reforming VAT concessions: a tax expenditure analysis
    Zu, Y.
  • Study on Reduced VAT Applied to Goods and Services in the Member States of the European Union: final report (2007).
  • Reduced rates of VAT: frequently asked questions
  • NSW Review of Federal Financial Relations: Supporting the Road to Recovery, Final Report