British Tax Policy 1979–90: equity and efficiency

ISSN： 0305-5736

Source： Policy and Politics, Vol.21, Iss.3, 1993-07, pp. : 207-217

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Abstract

The Conservative government in Britain in the 1980s was regarded as a tax reforming administration. 'Tax reform' is short-hand for efficiency in taxation which requires low rates on a wide base. There is a view that economic performance was improved, though at the expense of equity. This paper gives an account of the changes which took place and assesses their effects on both efficiency and equity. It finds that taxes became more regressive butt hat it is unlikely that there were any large efficiency gains. This is because though the rates of some taxes (especially income tax) were reduced, others were raised and, apart from corporation tax, tax bases remained the same or were narrowed. In particular the income tax base was made narrower by the introduction of new reliefs and the growth of old ones. Such changes are bad for both equity and efficiency.