It is time that the tax and accounting profession understand the role of tax in the economy in which they operate

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Just before I joined the meeting of the Tax Coop in Montreal last night to talk about tax ethics I was sent the Association of Accounting Technicians (AAT) submission to Parliament on Tax and Coronavirus. I should stress, they sent it themselves: this could not come from a disgruntled member.

It was a stark reminder of a point I made in my talk last night, when I said:

It really is time that we understood the real role of tax within the macroeconomy of the countries of which we are a part, so that we can truly understand the way in which tax systems might have to adapt to the crisis we face so that the most vulnerable, in particular, in our societies can be supported. I suggest that every professional institute should now be providing teaching on this issue and that it should be on every professional syllabus for examination study.

That is because the AAT recommended this:

In other words, in the face of a massive potential economic crisis that will be created, above all else, by a shortage of demand, the AAT is suggesting that people have their capacity to spend reduced.

What is more, they are demanding that this reduction in the capacity to spend be imposed right across the board, including on pensioners, so that those with the highest marginal propensity to consume and so have the greatest chance of ensuring that demand continues, are impacted, if anything, the most. In Keynesian macroeconomic terms, the AAT is, then, demanding a policy of austerity at the time when this is bound to increase the rate of corporate failures and increase unemployment. It is hard to imagine anything more destructive for the interests of their members, or society at large, that the AAT could demand.

I rest my case that it really is time that the professional tax and accounting institutes should begin to learn about tax in a macroeconomic environment. It is very clear that they do not understand it at present.