Research impact - Tax policy for recovery and growth

Karen Baxter
Kent's REF2014 success by University of Kent

A case study submitted to the Research Excellence Framework 2014 demonstrating the impact of the University's research.

An analysis of tax policy by Professor Chris Heady of the School of Economics has been used to inform fiscal policy, both in the UK and overseas. The research included a statistical analysis of the effects of tax structure on investment, productivity and economic growth in a range of countries over a period of more than 30 years. The research combined these results with an analysis of how tax policy could affect short-term recovery and inequality.

The main findings were that a shift of taxation away from income taxes (personal and corporate) towards consumption and property taxes could increase growth. In particular, a reduction in the taxation of low-skilled workers would contribute to both the short-term goal of aiding recovery and the long-term goal of securing growth.

The research had a direct impact on public policy, informing HM Treasury’s decision in 2011 to increase the main rate of value added tax and accelerate the reduction in the rate of corporation tax. It has been cited by the Organisation for Economic

Co-operation and Development (OECD) as a basis for policy reform to increase employment, and by the International Monetary Fund (IMF) as the basis for its analysis of tax composition and growth.

The Research Excellence Framework 2014 showed that Kent ranks 17th in the UK for research intensity, has world-leading research in all subjects and that 97% of our research is deemed to be of international quality.

Contributing to the University’s REF success were the number of our world class publications, the number of research active staff and the demonstrable impact our research has made to the sciences and to economic, social and cultural understanding.