Tax Reform in Troubled Times: Lessons from Investor Reactions to UK’s Tinkering with Tax Rates

Nadine Koch


On March 03, 2021, the UK’s finance minister Rishi Sunak announced a tax reform that marks a U-turn in the British corporate tax policy, as it includes a significant corporate tax hike to recover the fiscal costs of Covid-19 support measures, which were, as part of the announcement, concurrently extended. This study analyzes the investor reaction to the announced tax reform.

We find that the capital market reacts positive with regard to companies that are severely affected by the Covid-19 pandemic and the Brexit. However, the extension of Covid-19 support measures and refinancing them through a corporate tax hike comes at the price that more dynamic and innovative firms are penalized by the capital market. Thus, our results show that investors value the tax reform quite disparately for different companies. Moreover, the tax reform might jeopardize the UK’s future growth if dynamic and innovative firms suffer.

As urbanization increases, municipalities across the world have become aware of the negative impacts of road-based transportation, which include traffic congestion and air pollution. As a result, several cities have introduced tolling schemes to discourage vehicles from entering the inner city. However, little research has been done to examine the impact of tolling schemes on the routing of commercial fleets, especially on the resulting costs and emissions. In this study, we investigate a vehicle routing problem considering different congestion charge schemes for several city types. We design comprehensive computational experiments to investigate whether different types of tolling schemes work in the way municipalities expect and what factors affect the performance of the congestion charge schemes. We compare the impact on a company’s total costs, fuel usage (which drives emissions), and delivery tour plans. Our experimental results demonstrate that some congestion pricing schemes may even increase the emi