The Institute for Government (IfG), Institute for Fiscal Studies (IFS) and the Chartered Institute of Taxation (CIOT) have published an open letter to the Chancellor of the Exchequer, Phillip Hammond. With George Osborne introducing significant reforms to the Budget process and to tax policymaking in general, the bodies acknowledge that improvements have occurred, but believe that there remains too many measures being introduced, along with a lack of a clear strategy for key parts of the tax system. The letter sets out their recommended changes to improve UK tax policymaking, securing the UK tax base without removing HM Treasury’s ability to react to political and economic events and to raise revenue.
The letter makes the following recommendations:
Establish clear guiding principles and priorities
The Autumn Statement and Budget would be a good opportunity for Mr Hammond to give a clear indication of the direction of travel for the tax system as a whole.
Extend the roadmap approach
In line with the Corporate Tax Roadmap released in 2010, the Government should consider releasing roadmaps for other taxes, giving taxpayers an idea of future tax policy decisions.
Start consultation at an earlier stage
While welcoming the New Approach to Tax Policy Making, which committed to consulting on new tax measures, consultations are often released too late, which reduces their effectiveness.
Prepare the ground for future policy change
To avoid policy U-turns, the Government should seek to engage the public and build a consensus before taking action, where possible. This could be done by commissioning external reviews, perhaps with the help of the Office for Tax Simplification.
Return to a Single Fiscal Event
With longer Autumn Statements and Budgets becoming the norm, the letter calls for a return to one principal fiscal event a year, while recognising the need for additional technical changes throughout the year when necessary. It also recommends that the Budget returns to being a revenue event, rather than covering spending plans or other policy changes.
A more detailed and wide ranging report on this topic by these three organisations has been promised towards the end of the year.
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