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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?

Pacific Accounting Review , Volume 33 (2): 9 – Aug 10, 2021

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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 ReviewEmerald Publishing

Published: Aug 10, 2021

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

References