Commenting on the report, ‘Responsible tax: New rules for Brexit Britain?’, published today (Wednesday 21st February) by the thinktank CoVi, CIOT Tax Policy Director John Cullinane said:
“This report is a welcome contribution to the debate on the future of UK tax policy, and deserves careful consideration by government.
“Ideas in the report for improving the tax policy-making process push in the same direction as recommendations in last year’s Better Budgets report, published by CIOT, the Institute for Fiscal Studies and the Institute for Government. At the heart of both reports is the idea that more coherent and settled strategy, with cross-government and external input, added to effective scrutiny from initial consultation through to post-implementation review, can combine to produce better tax policy and a better public understanding of the tax system.
“The proposal for an industrial strategy tax roadmap is a good one. Enabling businesses to plan ahead with greater certainty about future tax policy should encourage investment and help counteract some of the uncertainty generated by the Brexit process. Having the Treasury and the Business department collaborate on such a roadmap would be beneficial. Too often the two departments carry out their policy thinking in overlapping silos, despite obvious cross-over. The limited remit of the Taylor Review of Modern Employment Practices is a classic example of this.
“The report’s suggestion that select committees, including those not traditionally looking at tax policy, could take on a greater tax scrutiny role, also has a lot of potential. From the environment to pensions to the creative industries there are many areas of policy where tax has a central role but the Treasury and HMRC are not the lead departments. Thinking about spending-like tax reliefs alongside grants, subsidies and other measures administered by spending departments would be an aid to judging the most effective way to achieve the policy outcomes being sought by government, which might be tax, spending, regulation or some combination of these.
“The idea that the Chancellor should commission a comprehensive review of tax reliefs prior to the UK’s exit from the European Union has merit though the timescale looks extremely ambitious, given the pressure the Brexit process is already placing on civil service resources. If, as suggested, the Office of Tax Simplification was asked to do this it would surely need significant additional resources to deliver a fully comprehensive review to the timetable suggested.
“Successive governments deserve credit for limited improvements to the tax policy process but these have not prevented the tax system from reaching unsustainable levels of complexity and leave a need for serious improvement. Hopefully the space created by moving to a single fiscal event (as advocated in Better Budgets), combined with a Chancellor who, whether through inclination or circumstances, seems less inclined than most of his predecessors to keep the tax system in a state of permanent revolution, will enable recommendations such as those in this report and Better Budgets to get the consideration they deserve from ministers and officials.”