Tories' Tax Commission Gets Mixed Reviews

by Robert Lee, for LawAndTax-News.com, London

23 October 2006

Proposals from the UK opposition's Tax Reform Commission have received a mixed press from independent commentators. Accountants BDO said: 'The report includes some sensible suggestions for tax simplification and reform but it also includes some peculiar ideas.'

Stephen Herring, tax partner at BDO Stoy Hayward, commented: “We trust that if the Chancellor responds in any way to the proposals, it will be to steal the Commissioners thunder, by reducing the corporation tax headline rate to 25% in his forthcoming Pre Budget Report, perhaps over two years.”

BDO welcomed proposals to reduce the rate of corporation tax to 25%, to abolish stamp duties on UK shares, and to introduce a participation exemption for all income from qualifying foreign shareholdings, but did not agree with reforms to the UK's 'Schedule' system. The firm also queried proposed reforms to capital gains tax, and positively hated the idea of imposing an income tax charge on the imputed rent from owner occupied housing.

The Federation of Small Businesses (FSB), the UK’s largest business organisation, had welcomed proposals by the Tax Reform Commission to simplify business taxes. John Walker, FSB Policy Chairman, announced that: “The FSB will support proposals to simplify taxes for small businesses in the UK no matter which political party they come from."

Speaking at the launch of the Report at KPMG's headquarters in London, Lord Forsyth announced that:

“The clear message from the evidence that we received is that Britain needs a fairer, lower, less complex and more competitive tax system. That is what our proposals seek to achieve. The current system is beginning to harm the UK economy, by undermining competitiveness and deterring investment. Without reform this will only get worse."

"Tax matters. It is not just a matter of high tax burdens making us poorer. The structure and design of a tax system matters too. Tax systems which are simple, stable and transparent encourage investment, employment, tax compliance and a higher quality of life. They are better for everyone."

“Our menu of proposals are realistic and set a direction of travel. While the speed of the journey is a matter for political judgment, and will be influenced by economic and fiscal conditions, the destination is clear – a simpler, lower, flatter, fairer, and more stable tax system. Reform will not be easy, it requires dedication and hard work, but the long term competitiveness of our economy and our public services depend on it.”

The proposals will probably remain just proposals. As with the ideas of the US President's commission on tax reform, they are politically uncomfortable, and along with chastity for St Augustine will share the fate of most such worthy initiatives: 'Yes, Lord, but not yet.'

Recommended