From VAT on school fees to business taxes, we’re living through a live experiment with the effects of tax on people’s choices. Evidence suggests the results could be far from clear-cut, says Tim Sarson

Last week, I was lucky enough to be on the panel for the Women in Tax network’s annual debate. The question was, “How do taxes affect behaviour?”

A very topical question in a month when private schools start charging VAT on their fees. It’s entrance exam season. Are there fewer 11-year-olds sitting them this year? Will dozens of schools go out of business, or is this a fuss about nothing?

And there’s plenty more examples. This week, I’ve seen warnings that British food production is at grave risk from the cut to Agricultural Property Relief and that we’re on the cusp of an exodus of international talent when the non-dom changes come into force in April.

It’s one of the recurring themes in the narrative around tax policy, which can skew towards the negative. The focus can be on the law of unintended consequences or deliberate policy objectives that may or may not succeed. Those carrots, tax incentives to do good things, or sticks, the so-called sin taxes, impact both consumer behaviour and business decisions.

Is tax really that important an influence in making decisions? As a consumer, do I choose a cheaper bottle of sugar-free pop over a highly taxed sugary drink? As a business, do tax incentives make me build my new R&D centre or factory in one place rather than........

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