When is a tax not a tax?

01 December 2015

George Bull

Over the years, in tax brief we have been keen to develop the idea that the UK tax system should reflect the needs of society. This involves considerations of questions such as:

  1. How much should government be spending and on what?
  2. How much of this should be raised through taxes?
  3. Who should be taxed, on which income or gains and at what rate?
  4. What 'social goods' should be encouraged through the tax system?
  5. And what 'social bads' should be discouraged through the tax system?

The range of issues this affects is predictably huge and one which is reflected in the growing burdens placed on HMRC. In addition to the taxes which people think about every day – income tax, national insurance (a tax by any other name), fuel duty, tobacco duty, perhaps capital gains tax, inheritance tax, incorporation tax, stamp duty land tax… the list is apparently endless. And then there are the new entrants. Rules on the pricing of alcohol. The carrier bag 'tax'. The sugar 'tax'.

It’s convenient to lump all these things together, but that doesn’t always produce the right results. For example, decisions on a sugar 'tax' will be driven by issues as diverse as medical evidence, retailer pricing strategies and the sensitivity of individuals’ buying habits to price increases, according to their own income levels and family requirements.

While we won’t be covering sugar tax in weekly tax brief, we will certainly be looking at the way the more traditional taxes have a role to play in the UK’s response to climate change. In this week’s edition of weekly tax brief, which coincides with the opening of the Paris climate change conference, two of my expert colleagues cover aspects of this.