Psychology of taxation

If you want to measure how powerful a psychological tool tax can be I would call on the humble plastic bag as my witness. The introduction of the 5p – rising to 10p – charge on plastic bags caused an 80% drop in the production of plastic bags. It has become ingrained in the public to take bags with us when going shopping. The payment of the charge seems such an irritating and avoidable expense that we have radically changed our behaviour.

Every year on 6 April (a very logical date!) the new tax year begins. Although the weather is normally nicer than 1 January it is generally not greeted with the same enthusiasm.

There are a good number of reasons to look at the beginning of the tax year as a new opportunity but regrettably very few people do this. This article looks at the much understudied...