Aiming for Well-Being through Taxation (FM nr. 160) 2019/9.4:9.4 Aiming for well-being through taxation: assessment framework

Aiming for Well-Being through Taxation (FM nr. 160) 2019/9.4

9.4 Aiming for well-being through taxation: assessment framework

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In chapter 4, following the conclusions from chapter 3 and in answer to the second main research question of what should be the framework for assessing taxation that aims for well-being, a framework that instils caution and restraint in states is proposed and explained.

This framework, included here, consists of ten questions to be answered by states as part of their legislative or other tax policymaking processes, questions that are easy to ask yet require thoroughness to properly answer. This recommended publication of the answers to those questions not only incentivises states to engage in critical examination and in proper motivation of the measures taken, but also increases transparency, the possibilities for scrutiny, and with that, state accountability. The answers to the questions allow to pinpoint aspects that are open to discussion, criticism, or improvement. The proposed assessment framework can thus serve as an essential supporting structure in assessment of taxation aimed at well-being, to enhance its quality and acceptability, and while it is intended to be answered in legislative or policymaking processes, the answers provided can also be of use in administrative, executive, and judicial matters of taxation aimed at well-being, for instance for purposes of cautious, yet critical, judicial review, and of consistency of administrative enforcement.

The framework of assessment starts with four general questions, and then moves to six questions that are placed under the headers of consequentialist, deontological, and virtue ethics normative theories, to allow integrated plural assessment.

Assessment framework for states aiming for well-being through taxation

1.

What is the well-being aim, and why that particular aim?

2.

What is the relative importance of well-being in this matter?

3.

Why should the state intervene in the matter?

4.

How is the tax measure assessed in comparison to alternatives?

5.

(Consequential:) What is the (predicted or actual) net well-being impact of government spending and taxing in the matter?

6.

(Consequential:) How effective and efficient is the tax measure (in prediction or in actuality) in achieving its well-being aims?

7.

(Deontological:) How is the tax measure assessed in terms of legality and legitimacy?

8.

(Deontological:) Which risks are associated with the tax measure in terms of political processes?

9.

(Virtue ethics:) Which character traits are stimulated by the tax measure?

10.

(Virtue ethics:) To what extent does the tax measure find public support?

In chapters 5, 6, and 7, and for illustrative purposes, this assessment framework is applied to, respectively, tax incentives for innovation, environmental taxes, and tax incentives for employment, to identify practices and issues. For each of these topics, the link with well-being and the role of the state is explored. Furthermore, for each of these topics, assessments are discussed concerning for instance effectivity, efficiency, and consistency with rules and principles, and recommendations are made.

The application of the assessment framework in chapters 5, 6, and 7 illustrates how that framework can serve as an essential supporting structure in assessment of taxation aimed at well-being, to enhance its quality and acceptability. The results documented hereafter underline that aiming for well-being through taxation brings with it many intricate and important issues, to which states need to be very sensitive. Not all questions are easily answered, and the answers to these questions often pinpoint aspects that are open to discussion, criticism, or improvement. The case studies addressed hereafter also demonstrate that a plurality of normative aspects can be assessed via an integrated framework, rather than in isolation.

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