Ahead of his first major speech as Chancellor at the Conservative Party Conference, Phillip Hammond is being urged to overhaul the way tax policy is made in the UK.
Institute for Fiscal Studies (IFS), The Institute for Government (IfG), and Chartered Institute of Taxation (CIOT) have written to the Chancellor listing immediate changes they believe will improve and simplify the making of tax policy and ultimately improve the UK’s tax system. These include:
- Returning to a single annual fiscal event, to stop Autumn Statements becoming second Budgets, leading to a proliferation of measures and very long finance bills.
- Starting the consultation process for tax changes at an earlier stage, to avoid the surprises that lead to costly errors and embarrassing U-turns.
- Establishing clear guiding principles and priorities, to give a clear indication of the direction of travel for tax policy the rest of the Parliament.
- Extending 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.
- Preparing the ground for future policy changes through external reviews to open up public debate about the tax system.
Jill Rutter, Programme Director, 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, IFS, said:
“Nearly £4 in every £10 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.”
Bill Dodwell, President, CIOT, 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.”
The open letter reflects initial findings from a project being carried out by the IFS, IfG & CIOT looking at how to improve budgets and tax. A full report will be published later in the year.
Notes to editors
- The full letter can be found here.
- The Institute for Government is an independent think tank that works to make government more effective.
- The Institute for Fiscal Studies (IFS) is Britain’s leading independent microeconomic research institute. IFS was launched in 1969 with the principal aim of better informing public debate on economics in order to promote the development of effective fiscal policy. Its research remit is one of the broadest in public policy analysis, covering subjects from tax and benefits to education policy, from labour supply to corporate taxation. For more information please visit ifs.org.uk.
- The Chartered Institute of Taxation (CIOT) is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. It draws on its members’ experience to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities.