CIOT calls for measured approach to manifesto tax reforms

The Chartered Institute of Taxation (CIOT) is urging political parties to be measured when proposing any radical new tax policies. 

Specifically, new policies that may greatly reform the current tax code in which the parties have yet to consult or inform the appropriate stakeholders. 

“Election manifestos are an important part of the democratic process and voters need to know what policies a party would pursue in government,” Glyn Fullelove, CIOT President said. “But parties should be careful not to make hasty commitments now that they will come to regret later.”. 

“This is especially true of a snap election like this one where manifestos are likely to be being pulled together in a hurry,” he added. 

CIOT identified eight principles to good tax policymaking that it hopes the parties will follow in their manifestos and during the campaign. They are: 

• Clear – unambiguous tax law, with full and accessible guidance, so people can understand how much tax they should be paying and why  
• Simple – avoid tweaks and gimmicks which make the tax code unnecessarily long and complex 
• Certain – making use of ‘road maps’ and other forward guidance, and avoiding retrospective taxation, so businesses and individuals can plan ahead with confidence 
• Equitable – treating taxpayers in similar situations comparably wherever possible, and avoiding injustices and traps for the unwary 
• Just – with a fair balance between the powers of tax collectors and the rights of taxpayers, and appropriate safeguards and oversight to protect the latter 
• Accessible – enabling all taxpayers to engage meaningfully with the tax authorities, and showing flexibility to individuals with particular needs 
• Joined-up – ensuring tax and benefits systems interact effectively and coherently, and different government departments and devolved administrations
• Work closely together on overlapping issues 
• Inclusive – with policy and legislation consulted on in a wide and meaningful way 

 Fullelove added that most will agree with the principles they have put out but that any reform may have unanticipated consequences: “In finalising their manifestos the parties should keep in mind the principles of good tax policymaking, and test their plans against them. Few will disagree with any of these principles but sometimes a tax change which sounds a good idea can have unanticipated impacts or practical challenges”. 

A comprehensive consultation process will identify unforeseen issues and while some reform may be easy to implement, their effects may be far-reaching: “In government the consultation process can iron a lot of these out, providing parties have not boxed themselves in beforehand either with excessive detail or with unduly hasty implementation timetables,” Fullelove said. 

 “This applies in particular to significant structural reforms. While a change in a tax rate or level of an allowance will, in most cases, be fairly easy to implement at short notice (though at the expense of taxpayer certainty), major structural changes will generally benefit from being exposed to thorough multi-stage consultation to expose any unforeseen consequences such as groups who might unintentionally be caught in the scope of the change.”