Tory complexity plan needs to be more radical
I haven’t really known what to make of the Tories’ plans on tax simplification.
Tax complexity is one of those tricky topics that I think nobody really knows how to solve, and I suspect there are good reasons for Richard Murphy-like cynicism about the whole project.
The plans are two-fold: firstly, an Office of Tax Simplification to monitor tax policies.
And secondly, a joint parliamentary committee on tax matters.
Of the two, I like the second far more than the first. Members of the House of Commons are, to put it mildly, very ill-briefed on tax frequently. To ask them to scrutinise the finance bill is hopeless, and a joint committee, comprising the much more experienced members of the House of Lords as well as those from the commons, would add to the intelligence of the debate.
The Office of Tax Simplification is less attractive. More bureaucrats do not create less bureaucracy; surely a principle the Tory party exists to promote.
Like a Corporate Social Responsibility department within a multi-national company, it will only exist to be paid lip-service to. Real simplicity, like real CSR, comes from the top; in the case of tax, from clear thinking and a desire and political will to embrace radical solutions.
Take one example. The debate over multi-nationals leaving the country has been hampered by complex arguments over whether we should lower the corporate tax rate, or just hammer the big companies with fiercely complicated rules about overseas subsidiaries. I doubt either would work.
In fact, the most elegant solution, rarely discussed, came from Deloitte. It suggested a low tax rate for mobile income, recognising that some things can be taxed and some can’t.
The Tories should aim for similar realism on all aspects of tax; through doing so, they may get somewhere towards a simpler and better tax system.