This chapter will look at the major changes in tax policy in the UK and around the world in the past 25 years and the forces that have shaped these, identifying the international trends and common elements and asking why they have emerged and what lessons can be learned for tax policy generally and for the UK in particular. This analysis will cover major institutional changes in tax setting over this period, and also consider what arguments about tax policy have been influential in shaping real policy, and which have been ignored or thought to be irrelevant in practice. The chapter will address the main theoretical ideas on the political economy of tax policy, ranging over naive median voter views of the world to more sophisticated models of the policy process, some of which try to gauge how political institutions map into policy outcomes. It will also review some of the relevant empirical literature in this area: for example, do political economy considerations explain lowering of top marginal tax rates? One key issue will be to discuss what drives preferences for redistribution. Another is whether there are political forces which lead the tax system to diverge systematically from normative ideals. The chapter will also cover issues such as the role of the EU in shaping tax policy and the success of tax treaties in achieving co-ordination.