Most would agree with the comment it’s ‘spiralling out of control’.
Of course, we’re not talking about how much tax is actually extracted, painlessly or otherwise by the authorities, so we can leave political arguments about rising or falling tax burdens behind.
No, what I and many other commentators focus on is the increasing complexity and opacity of the rules that we have to deal with and the consequent administrative burden we all have to shoulder.
So what are we going to do about it? One line of attack is to smooth the implementation of new legislation. We can’t stop our elected masters changing the system – Parliament is sovereign as far as tax goes, after all.
But if there are to be changes, proper consultation can ensure they come in as painlessly (and effectively, i.e. properly targeted) as possible.
Proper study of cost vs benefit, taking into account administrative burdens, should confirm it’s really worth making the change.
A lot of this happens already, and effectively. But how do we ensure it does? This is where I think we have a need for a new body to keep an eye on the whole process.
I’ve now dubbed it the ‘Tax Practice Committee’ – not a perfect term but it will do as a working draft. It emphasises a need to concentrate on the overall better running of the system – part of a simplification drive.
I see the TPC as representative of all interested parties: professions, industry, consumer representatives, even tax authorities – to have oversight of these processes. It could be a powerful ‘sounding board’, ideally with statutory backing.
I don’t have a fully formed proposal for the TPC yet. Instead, I have some ideas that I hope to discuss and refine with others who have voiced the need for a similar body or process over the coming months.
If we can get agreement on the shape of the idea, I’ll be able to put out a proper consultative document in the autumn. Then we can start getting up a head of steam – and make a start on getting the rampant legislative beast under some sort of control.
– John Whiting is president of the Chartered Institute of Taxation
Political realities will hit progress
John Whiting will undoubtedly do a sterling job as chairman of the Chartered Institute of Taxation. The CIoT has grown in influence and standing over the last few years, mostly through the efforts of tax experts like John who have been assiduous in making detailed technical representation to the Revenue, and raising the profile of taxation issues among taxpayers.
With a strong technical grasp and communication skills, it is intriguing John has chosen, as one of his aims for his year in office, to form a tax committee to have oversight of the tax system and its development.
The idea seems sound. A body that will encompass a range of interested parties – presumably government and private sector – which will work to ensure tax legislation – in all its myriad forms – is considered and appropriate.
Unfortunately it is hard to see how the TPC would work in practice. You could compare a TPC to the Financial Reporting Council, set up a decade ago, which through its subsidiaries such as the Accounting Standards Board and the Financial Reporting Review Panel has improved the standard and standing of UK corporate reporting.
However, financial reporting and company law does not have the political sensitivity of tax. Taxation is intimately, minutely and constantly bound up in the governmental and the political process. It is hard to see Treasury civil servants, the Revenue and Customs giving their support to a TPC with the implications that their work will be subject to scrutiny and criticism.
As this election demonstrated, in the current political climate politicians have to commit themselves to maintaining the current headline rates of taxation. This political necessity does nothing to improve the system.
While accountants and tax experts remain political observers rather than seek elected political office that will not change.
Politicians make statements about tax simplification but few see it as enough of a priority to do something about it. The CIoT has suggested merging the income tax and national insurance systems.
While that may be technically sensible, politically such a move would be a non-starter. Equally, after starting out with high hopes, the tax law rewrite project is looking unlikely to deliver anything of substance.
The tax system in the UK is in a mess. Taxpayers know that, tax officers know that and experts like John know it. We need a tax overhaul and a system fit for the 21st century.
But however intellectually coherent the arguments may be for John’s TPC, it seems unlikely there is the political will to make it work.
– Peter Williams is a freelance writer.
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