The report, from the CIOT, IFS and IfG, sets out ten recommendations for the Government for making better tax policy.
The Chartered Institute of Taxation (CIOT), Institute for Fiscal Studies (IFS) and Institute for Government (IfG) have published Better Budgets, a report outlining ten steps towards making better tax policy. The report follows meetings and consultation with various stakeholders, including tax policy experts, officials working on Budgets in other countries, individuals and organisations. The report was launched on 16 January 2017 at an event attended by Jane Ellison MP, Financial Secretary to the Treasury, who gave the Government’s immediate response to it. She confirmed that she shared the aims of the report and then focused on four key themes arising from it: stability, direction, professionalism and teamwork.
The report sets out ten key recommendations:
Stick to the commitment to a single principal annual fiscal event and cut down Budget measure proliferation
The report welcomes the Chancellor’s recent commitment to one fiscal event a year, and encourages the Government to stick to that commitment.
Establish clear guiding principles and priorities for tax policy
Tax policy should be announced at the outset of Parliaments, to avoid an ad hoc approach.
Extend the road map approach
Following the Corporate Tax Road Map in 2010, the report encourages a wider use of road maps, which should follow a set of key principles.
Start consultation at an earlier stage
Consultations should commence before key decisions have been made and should also set out different options or include calls for evidence to allow the widest possible understanding of issues.
Develop more active approaches to consultation
Respondents to consultations should be actively sought, to ensure a wide range of responses.
Prepare the ground for future reform, and engage the public
This could include independent external reviews to open up discussions.
Address the perceived capability gap around tax policy making
HMT and HMRC staff should be supported to develop their expertise, and Parliamentary concerns around external secondees should be addressed to allow the use of their expertise.
Overhaul internal processes
Tax measures should be subject to earlier independent oversight.
Enhance Parliament’s (and the public’s) ability to scrutinise tax proposals
Increased transparency from the Government, with better and clearer documentation, along with oral evidence sessions, would assist Parliament.
Institutionalise and enable evaluations of tax measures
There should be effective and routine post-legislative review of whether measures are achieving their objectives at an acceptable cost, with Parliament holding the Government to account.
In her response, Jane Ellison focussed on four key themes she had taken from the report. The first was stability where she agreed that sometimes not making a change can be a positive step but she made the point that it can be difficult to ‘sell’ that fact in politics. On direction, she cited some examples of where the Government had signalled its intent to look at an area in advance in order to get the debate started early, such as the Autumn Statement announcement of plans to look at taxation of self-employment vs employment, and confirmed this would be an approach taken more often in future. The third theme was professionalism where she acknowledged more work was needed and mentioned some training initiatives taking place. The final theme was teamwork where she confirmed the Government’s intention to draw on expertise across the board, particularly the Office of Tax simplification (OTS).
In the Q&A at the end, Jane Ellison emphasised the fact that during consultations the most valuable representations are real life examples from industry as these really do help Ministers understand the key issues.
There has been a growing sense of frustration with some aspects of tax policy making. It will be interesting to watch and see how many of the recommendations are adopted by the Government and in what form.
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