THE TAX PROFESSION should be able to scrutinise how a policy change is to be implemented in its legislative phase, a group of influential MPs has said.
The Commons’ Treasury select committee released its report on the principles of taxation today. It recommended that the government should produce a detailed assessment of the way in which any proposed new tax, or change to a tax, would be implemented before it becomes legislation.
Such analysis would “enable the tax profession to assess their quality and alert government to shortcomings”, the report said.
The practicability of new laws should be fully understood at the time, the review added, and the compliance costs and ease of collection should be quantified. These can then be compared with outcomes over time.
The report also said that sudden and unexpected change in tax policy is harmful to business. It urged against sudden wholesale reform of the system.
The committee also advised that using taxation to support wider policy goals “should not be ruled out”, but added indiscriminate use of taxation may increase the complexity of the system.
Committee chair Andrew Tyrie (pictured above) said: “Governments should be wary about using tax policy as a substitute for direct policy measures, doing so only after careful analysis shows it to be the most effective tool.
“In setting taxes, governments should be alert to the effects tax policies will have on economic growth.”
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