The LSE School of Public Policy recently hosted the conference “Central Bank Digital Currencies: international and domestic challenges”. The conference brought together scholars and policy experts to discuss some of the most difficult challenges surrounding the development and implementation of central bank digital currencies.
Ian Roxan spoke on the tax implications of central bank digital currencies (CBDCs). Not only should they create few additional tax liabilities, their economic impact could free up resources to reduce distortionary taxation. The greater impact, however, is likely to be on tax administration. The traceability of CBDCs can be a powerful tool to control tax evasion. CBDCs can also contribute to the emerging trend of digitalising tax administration – Tax Administration 3.0 – of which the UK’s “Making Tax Digital” programme is just one part. Nevertheless, the traceability of CBDCs can also bring risks. It will be essential to ensure that the automatic operation of algorithms based on CBDCs and other data are adequately supervised, and that taxpayers' rights are properly protected.
click here for a recording of the event