The function(s) of taxation: The impacts of regulatory taxes on taxation

Taxes can be designed to fulfil a number of different objectives for society, which can result in both intended and unintended consequences. Three of the core functions of tax include raising revenue, redistribution, and the regulation of behaviour. This paper explores how regulatory taxes –taxes designed to change behaviour –interact with the other functions of tax. This paper ultimately argues that regulatory taxes prioritise regulation over revenue raising and redistribution, which may introduce messaging about taxation more generally. It communicates that it is acceptable not to pay tax, creating a possibility for ‘permissive tax avoidance’ in an anti-tax avoidance era. It also brings elements of regressivity to a tax system and communicates that it is those with the least who should pay to address environmental and societal harms.