Treasury has "no clear strategy" for tax system, say experts

The Institute for Fiscal Studies, the Institute for Government, and the Chartered Institute of Taxation say the UK's tax system suffers from "too little sense of direction, consultation or evaluation"

By Nicholas Mairs

03 Oct 2016

Experts have called on chancellor Philip Hammond to commit to a more straightforward tax system.

The Institute for Government (IfG), Institute for Fiscal Studies (IFS) and Chartered Institute of Taxation (CIT) have made a series of recommendations to improve and simplify the policy-making process.

The groups said “outsiders still find it hard to discern a clear strategy” for the tax system, despite improvements under George Osborne.

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In an open letter to Hammond, the authors called for an end to Autumn Statements “becoming second Budgets” with sweeping fiscal changes.

Instead, they suggest establishing clear guiding principles and priorities to give an indication of the direction of travel for tax policy throughout the rest of the parliament.

Paul Johnson, the director of the IFS, said the existing tax system was “not fit for purpose”.

“Too many changes are sprung on the country in too many fiscal events with too little sense of direction, consultation or evaluation,” he added.

The joint letter calls on the Treasury to adopt a more long-term approach, such as starting the consultation process for tax changes at an earlier stage in order to avoid costly errors and embarrassing u-turns.

The authors have urged the extension of the “roadmap approach” currently used around corporate tax, which they say will provide a clear direction for the future in areas where individuals and businesses need to plan and make long-term decisions, such as pensions and savings.

Bill Dodwell, the CIT’s president, said: “Good tax policy comes from an open, consultative process in which all those affected have a voice, and consultation starts at an early enough stage of the policy development process to be meaningful.

“The reforms we suggest would help achieve this. We hope the chancellor will take them on board.”

And Jill Rutter, programme director at the IfG, added: “When she launched her leadership campaign, Theresa May said it was time to talk about tax. We agree. And the first thing we need to discuss is how to reform the Budget process to make tax policy fit for post-Brexit Britain.

“That means clearer direction, fewer surprises, a radical reduction in the number of measures and a willingness to engage the public on the big choices.”

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