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Aims: This module is about the economic effects of taxation, and economic aspects of tax policy. It aims to give students an understanding of the key economic issues in tax policy, and to show how these can be analysed using standard tools of theoretical and empirical economic analysis. We will explore what economics tell us about the effects of taxation and if economics help us design better tax policy.

The subject matter of the courseÌý willÌýcover the following topics:

Introduction and key concepts, Commodity taxation: Value-added taxes (VAT) and sales taxes, Optimal commodity taxation, Corrective taxes: Part I,ÌýCorrective taxes: Part II + Tax policy project, Personal income taxes: Part I, Personal income taxes: Part II, Tax evasion and tax enforcement.

Objectives: At the end of the module, students should:

• Have a knowledge of the structure of taxation in at least one country
• Be familiar with basic economic concepts and methods relating to taxation, including incidence and efficiency.
• Have an understanding of some of the key behavioural effects of taxes, including those on consumer spending, labour supply, saving and investment.
• Be able to analyse, using relevant economic concepts and methods, a number of issues in tax policy, such as the optimal structure of indirect taxes, and the relative merits of different forms of income taxation.

Suitable for: Final year Economics (L100 / L101 / L102) and final year BSc Economics and Geography (LL17), BA Philosophy and Economics (VL51) and BSc Philosophy Politics and Economics (4V86) students.

Prerequisites: ECON0019, Quantitative Econometrics, ECON0016 Macroeconomics and ECON0013: Microeconomics (or equivalents)

Assumed knowledge: The module mainly makes use of ideas and methods drawn from microeconomic theory, including the standard theories of consumer and producer behaviour and the core ideas of welfare economics. Students coming into the module should be familiar with constrained optimisation, Pareto optimality, income and substitution effects of price changes, measures of welfare change, etc. In addition, it would be useful if students had a basic understanding of econometric methods, and in particular the ability to interpret the results of econometric regressions.