THIS MORNING’s Public Accounts Committee hearing into tax avoidance and the Big Four’s activities in the area threw up some interesting – and, indeed, surprising – issues.
Chief among them is the accusation made by committee members that the Big Four are too close to government and exert too much influence over the formation of tax law.
There is a twisted logic to the argument mounted by committee chair and Labour MP Margaret Hodge, but in the end I struggle to see the any alternative to the way consultations and projects are conducted, other than to be more open about it.
Particularly telling was Hodge’s question of whether PwC’s Kevin Nicholson would second a senior staff member to the Office of Tax Simplification – which, it is fair to say, is understaffed and faces a task of Augean proportions. He wearily replied: “I would if I wasn’t criticised for having someone on the inside.”
The government cannot afford to silo itself off from industry experts who, after all, are hugely experienced and eminently qualified to discuss issues and offer their analysis of tax policy and how to improve it. Few others can provide that.
Bill Dodwell’s proposal for greater transparency, such as publishing relationships between tax authorities and companies, could prove effective in an effort to help restore public trust, but to suggest they ought to be excluded from taking government contracts and accuse them of skewing the law towards themselves strikes me as a somewhat extreme and counterproductive.
The government routinely seeks the advice of top professionals from a whole range of sectors, and so to query only the Big Four’s role seems peculiar. Of course, if the government is concerned about the quality or the fairness of legislation – and indeed the influence of the Big Four and others – then perhaps Nicholson’s suggestion of a “sunset clause” where a law can be rescinded after a set period of time should be considered.
The heightened emotion around the issue is becoming detrimental to the discourse. Perhaps it is time to take a step back and consider how collaboration is of benefit, rather than create trench warfare.
Does Darwin's theory apply to taxation? Colin ponders...
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