Budget is a ‘springboard’ for tax policy reform, says new report

A report argues that the government must change the way it makes tax and budget decisions.

Published 16 January by the Chartered Institute of Taxation (CIOT), Institute for Fiscal Studies (IFS) and Institute for Government (IfG), the “Better Budgets” report outlines ten steps toward making tax policy better.

The steps of improvement aim to reduce taxpayer confusion, and cut costly errors, as the current tax policy making process is “not fit for purpose”, CIOT said.

The report backs the move by chancellor Philip Hammond to a single Budget each year, a change that was recommended by the institutes in September 2016. Further budget recommendations in the report include publishing clear guiding principles for tax policy, improved consultation, and using external public reviews of the tax system for public debate.

Bill Dodwell, president, CIOT, said: “Moving to a single annual fiscal event provides a real opportunity to get off the treadmill of constant change, reducing the strain on the government’s tax policy resources and freeing up time for better consultation and scrutiny of proposals that are put forward.”

The institutes also argue that the Treasury needs a more robust policy making process, with decisions challenged and made collectively, before measures are included in the Budget. In addition, the report notes that parliament needs to improve the quality of its scrutiny of both the chancellor’s proposals and the impact of implemented measures.

Jill Rutter, programme director, IfG, said: “The quality of tax policy making matters to every citizen, and currently too much about making tax policy is taken for granted, or thought to be for solely the chancellor and the Treasury to decide. We need to overhaul the internal Budget processes.”

Paul Johnson, director, IFS, added: “Tax policy is too important, we need a more open policy making process as a route to a better tax system. The lack of any explicit tax strategy allows policy to be made on the hoof and makes it harder to engage the public.”

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