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Tax Bodies Advise On UK's New Tax Policy Direction

by Jason Gorringe,, London

07 October 2016

The Institute for Government (IfG), Institute for Fiscal Studies (IFS), and Chartered Institute of Taxation (CIOT) have released a wishlist for the new UK Chancellor.

They said that Phillip Hammond, who was appointed Chancellor in Theresa May's new cabinet, should:

  • Return to a single annual fiscal event, to stop Autumn Statements becoming second Budgets, which they said have led to a proliferation of measures and very long Finance Bills;
  • Start the consultation process for tax changes at an earlier stage, to avoid surprises that lead to costly errors and embarrassing U-turns for the Government;
  • Establish clear guiding principles and priorities, to give a clear indication of the direction of travel for tax policy;
  • Extend the roadmap approach, pointing to 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; and
  • Prepare the ground for future policy changes through external reviews to open up public debate about the tax system.

CIOT President Bill Dodwell 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."

Jill Rutter, Programme Director of the IfG said: "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."

Paul Johnson, Director of the IFS, said: "Nearly GBP4 in every GBP10 earned in the economy is taken in tax. How the tax system works matters enormously to us all. The current system for tax policy making is 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."

TAGS: individuals | Finance | Budgets | tax | business | pensions | value added tax (VAT) | Tax

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