THE ACCURACY of the government’s tax targets have been queried by the Treasury Select Committee.
The yield from tax agreements such as the UK-Swiss deal has fallen well short of expectations, with that particular arrangement only generating a quarter of the £3bn target in 2013. The deal overall was thought to be worth £5bn to the public purse, but Office for Budget Responsibility figures show just £800m has been collected since it came into force in January 2013.
In a report on December’s Autumn Statement, the committee criticised the validity of such predictions.
With little more than a week until the Budget is due, the criticism adds to the pressure chancellor George Osborne is under following the disclosure by the OBR of a £20bn black hole in the public finances.
As a result, an additional year of public spendin austerity may be required in order to balance the UK’s books. The models, the OBR said, suggest the government should refrain from relying on an economic recovery to cover the shortfall.
Committee chair and Conservative MP Andrew Tyrie (pictured) said such projections on tax were “inherently extremely uncertain” and the government should avoid placing concrete figures upon them.
He said: “The committee warned in its report on the Autumn Statement 2012 that the forecast revenues from the UK-Swiss agreement – at £5.3 billion – were subject to uncertainty and that the proceeds may not meet expectations. These concerns appear to have been justified.
“Even after the event it is often very difficult to establish how much a particular measure has raised. The more transparency about the yield, and therefore each proposal’s effectiveness, the better.
“The OBR should look again at how the government accounts for projected revenues, based on previous experience.”
Does Darwin's theory apply to taxation? Colin ponders...
The UK tax gap fell in 2014-15 to its lowest-ever level of 6.5%, revealed official statistics published today
Changes to the tax system is urged to support the growth of entrepreneurs, found a report from the Grant Thornton UK, the Institute of Directors, and the Prelude Group
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states