The Liberal Democrats have launched a commission to examine their tax policies with a promise that accountants and economists will have a key role to play in the development of policies.
Leader Charles Kennedy set out the remit of the Tax Commission at a Business Forum breakfast of supporters on Tuesday.
He revealed that it would be chaired by senior Treasury official Michael Williams who has had 30 years working at the heart of UK economic policy, including a stint from 1998 to 2003 establishing the UK Debt Management Office.
There were no details of other members of the Commission, but a senior aide to Kennedy said, ‘there will be senior accountants and economists on the Commission, but it’s up to Mr Williams who is on the Commission. We want it to be high-powered and effective.’
The new body will be seeking to create a simplified and more efficient tax system, with a fair set of tax bands, rates and reliefs.
This would examine the role of tax credits, and try to take low earners out of taxation altogether. It will also look at hypothecation of taxes and ways for taxpayers to be able to see clearly how their taxes are spent.
A key element of its remit will be tackling tax avoidance and evasion.
Kennedy said: ‘The group will need to consider both how the overall system can be reformed to reduce the opportunity and incentives for tax avoidance, and how to tackle tax evasion.”
He also wants harmonisation of indirect taxes across the European Union, moves to reduce tax competition within it, and moves to promote decentralisation and environmental action.
‘In order to challenge for power at the next election, the Liberal Democrats must demonstrate over this Parliament that the economy will be safe in our hands,’ said Kennedy.
‘Taxation should be fair – based on people’s ability to pay. It should be straightforward and open – so that people see where their money is being spent. Taxation should frame a competitive business environment and it must encourage sustainability, with economic instruments used to deliver public policy objectives.’
A Lib Dems spokeswoman said: ‘This is not about dropping our policies of a 50 pence in the pound top rate of income tax for those earning more than £100,000 or replacing council tax with local income tax. It’s about making sure our tax policies are ready for the future.’
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