Tax Law in Times of Crisis and Recovery

This book examines the relationship between tax law and crisis. In times of environmental, financial, and public health breakdown, policymakers look to tax for solutions. Yet these crises also constrain the ways in which tax liabilities can be imposed and administered, and limit the revenues that can be collected. What should governments do in these circumstances and what are the wider consequences for states, societies, and institutions such as the EU? The book shows how crises place strain on the basic functions of tax, including revenue-raising, institution-building, regulation, redistribution, and the structuring of society. These strains bear more heavily on some sections of business and society than others. This makes the tax consequences of crisis unpredictable. It also means that the best choice of legal response is not merely a technical matter. Instead, it engages deeper attitudes towards crisis relief, change, social values, and democratic control. These issues are highlighted by COVID-19 but are of utmost lasting importance. The book takes a comprehensive approach and looks in more depth at the systemic roles that crises play in contemporary tax systems. It features an impressive cast of leading researchers across multiple jurisdictions and is essential for policymakers and scholars alike. Table of Contents 6 Contributors 8 1. Introduction 12 I. Overview 12 II. Literature Review 13 III. Revenues and the Tax State 16 IV. Revenues and Institution Building above the State 19 V. Environment and Regulation 22 VI. Justice, Distribution and Society 23 VII. Concluding Comments 26 PART I: REVENUES AND THE TAX STATE 28 2. Schumpeter's Crisis of the Tax State, Globalisation and Redistribution 30 Abstract 30 I. Introduction 30 II. Schumpeter's Tax State 32 III. Crises and the Tax State 34 IV. Globalisation and the Tax State 38 V. The Tax State: Effectiveness and Redistribution 40 VI. Conclusion 47 3. Lessons of Three World Wars 50 Abstract 50 I. Introduction 50 II. The Napoleonic Wars 1793–1815 51 III. World War I 1914–18 53 IV. World War II 1939–45 56 V. Lessons Learnt 59 VI. Applying These Lessons to the Present UK Tax Environment 61 VII. A Last Word 64 4. Taxes During Wars and Crises 66 Abstract 66 I. Introduction 66 II. Wartime Tax: Excess Profits Tax 68 III. The Broad Contours of the Tax During World War I 69 IV. Specifics of the Design and Implementation During the World Wars 70 V. Excess Profits Tax vs Financial Transactions Tax 82 VI. The Future of Taxation: Learning from Experience 85 5. Earmarking of Taxes for Disruption and Recovery 86 Abstract 86 I. Introduction 86 II. Earmarked Taxes Compared to Other Tax Policy Options 89 III. Enquiry into Theoretical Justifications for Earmarking 93 IV. Reviewing the Merits and Demerits of Using Earmarked Taxes in Periods of Disruption 99 V. Designing an Earmarked Tax: Drawing from Past Insights and Reflecting on Pandemic-Triggered Responses 101 VI. Conclusion 105 6. Counting Doubloons. A Critical Assessment of how Caribbean British Overseas Territories are Funding the COVID-19 Response 106 Abstract 106 I. Introduction 106 II. Caribbean British Overseas Territories as a Group of its Own Right 108 III. Public Finances in Caribbean British Overseas Territories 109 IV. Caribbean BOT'S Policy Response to the COVID-19 Pandemic 111 V. Lessons Learned from the Caribbean BOTs' Financial Response to COVID-19 113 VI. Conclusion 120 PART II: REVENUES AND INSTITUTION BUILDING ABOVE THE STATE 122 7. The Role of Crisis in State-Building the European Union through Finance and Taxation: Will COVID-19 and the Russian Attack Trigger Further Union? 124 Abstract 124 I. Introduction 124 II. The Finance Elements of a (Federal) State 125 III. Finance, Budget and Taxation in the Birth and Evolution of the European Communities (1951–2007) 127 IV. How the Great Recession Fostered EU Powers in Finance and Taxation 135 V. Will a New Crisis Trigger Further Union: COVID-19 and the Russian Attack on Ukraine 140 VI. The EU as a Financial State: Current Proposals and Final Remarks 142 8. Revising the Justification for an EU Tax in a Post-crisis Context 146 Abstract 146 I. Introduction 146 II. A Brief Overview of the Justifications for Taxation 147 III. Taxation and Public Finance in the EU 150 IV. The Many 'Sources of Funding' and the Relevance of Taxes 159 V. Conclusion: A Case for an EU Tax? 163 9. Fiscal Evolution and the Syndemic 166 Abstract 166 I. Setting the Stage of the Evolutionary Analysis 166 II. Biopower and Biopolitics as Overarching Causes of Tax Convergence 171 III. The State of Exception and COVID-19 Nationalisms 175 IV. Biopolitics as a Possible Explanation of the EU Fiscal Evolution 179 10. The COVID-19 Crisis as a Momentum for the Creation of a European Tax System? 182 Abstract 182 I. Introduction 182 II. The Current Financing System of the EU Budget and the Past Tax Proposals as EU Own Resources 183 III. The 'Potential' Role of Taxation in Financing the Union's Response to the Crisis 185 IV. Planned New EU Own Resources 187 V. Unanimity under the Treaties on Own Resources and Tax Legislation: A 'Double Obstacle' to Introducing Own Resources Having a Fiscal Nature? 194 VI. Conclusions 198 11. A Case for VAT Treaties: International Tax Cooperation for Sustainable Recovery 200 Abstract 200 I. Introduction 200 II. VAT Challenges in the Digital Economy 201 III. VAT Treaties 204 IV. Distributional Consequences 207 V. Conclusion 212 12. In Good Times and in Bad: Global Tax Governance During Economic Downturns 214 Abstract 214 I. Introduction 214 II. The 2007–08 Crisis 215 III. The 2020 Crisis 217 IV. What Matters in Times of Crisis? 219 V. Conclusions 230 PART III: ENVIRONMENT AND REGULATION 232 13. A Case for Environmental Taxation as a Response to the COVID-19 Economic Crisis 234 Abstract 234 I. Introduction 234 II. A Common Approach as the Proper Tool to Boost a Green Recovery from the COVID-19 Pandemic in the EU 236 III. How Could the Proposed EU CO2 Tax Fit Into the Framework of Existing EGD'S Initiatives? 241 IV. The Effects of the COVID-19 Pandemic on Environmental Tax Design 247 V. Conclusions 256 14. The Future of the EU's Financing in Times of Disruption and Recovery: Normative and Technical Issues of Greening the EU's Own Resources System 258 Abstract 258 I. Introduction 259 II. The Pillars of the EU's Financing System Until 2021 261 III. Environment-Related Own Resources in the EU's COVID-19 Recovery Strategy 262 IV. Assessment of the Plastic Waste-Based Contribution's Legal Design in Light of the Objectives Pursued 263 V. Proposal for a (Re-)design of Green New Own Resources as Tax-Based Contributions 265 VI. Challenges and Obstacles to a (Re-)design of Green New Own Resources as Tax-Based Contributions 267 VII. Conclusion and Implications for Future Research 271 PART IV: JUSTICE, DISTRIBUTION AND SOCIETY 274 15. The Implications of Intergenerational Issues on Tax Policy in a Post-COVID World: An Examination of Age Discrimination 276 Abstract 276 I. Introduction 276 II. Intergenerational Inequality, the Numbers 278 III. Tax Law and Policy 282 IV. A Long-term Approach 293 V. Conclusions 295 16. Flexible Work within Employment Relationships: A Conceptual Scheme for Fiscal Policies 298 Abstract 298 I. Introduction 298 II. The Rise of Flexible Work in the Workplace 300 III. Canada's Pandemic Fiscal Response: Inadvertent Success 305 IV. Redistribution via the Workplace 311 V. Conclusion 316 17. How to Award Financial Aid Amidst a Pandemic through the Lens of a Tax Scholar 318 Abstract 318 I. Introduction and Research Approach 318 II. The Importance of Acknowledging Differing Phases of a Pandemic, Epidemic, or Crisis 321 III. Public Finance Considerations When Awarding Financial Aid in Connection with a Pandemic, Epidemic or Crisis 322 IV. Principles that have been, Directly or Indirectly, Integrated in the Design of Financial Aid Measures in Connection to the COVID-19 Pandemic 323 V. Concluding Summary and Policy Recommendations 336 18. Law and Beyond: Legislation in Times of Pandemic and the Rule of Law 338 Abstract 338 I. Introduction 338 II. Fuller's Inner Morality of Law 339 III. The Rule of Law (Formal Concept) 340 IV. Anti-COVID Legal Shield in Poland (An Overview) 342 V. The Rule of (Bad) Law? 344 VI. Conclusion: Fuller's Thought Experiment Revisited 354 Index 356