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Economists look foremost for efficiency in the tax regime. Efficient taxes are those which have the least effect in diminishing output as a result of their disincentive effects. Unfortunately, the most efficient taxes are often the most inequitable so governments must seek a compromise. They must also consider the ease of avoidance of taxes and the costs of collecting them. With the rise in importance of adverse environmental effects of human activity there are increasing opportunities for taxes which unequivocally increase well-being because they both raise revenue for government and, at the same time, discourage environmental damage. A good example would be a tax on carbon emissions.
Professor & Head of QUT's School of Economics and Finance, Tim Robinson
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