TaxPersonal TaxMPs’ expenses: taking liberties

MPs' expenses: taking liberties

MPs' expenses system remains a very sore point for taxpayers

It’s no surprise that Harriet Harman wanted to exempt MPs’ expense claims
from the Freedom of Information Act. Permitting taxpayers to see how their money
is spent within a fundamentally flawed framework was always going to provide an
open wound at which the public could continue to pick.

If we are serious about reforming MPs’ expenses then the whole system needs
to be dramatically overhauled and re-thought.

MPs’ expenses should be treated in the same way as all employees’ expenses,
but the reality is that their treatment differs enormously in a number of
significant ways.

MPs’ expenses are tax free. If an employer provides permanent accommodation
for an employee it is treated as a benefit in kind. If the phone line rental is
in the employee’s name, but paid for by the employer, it is a taxable benefit.
If MPs had to pay tax on their expenses as other employees do, they may be
encouraged to spend according to their needs and not the limits set by the
expenses policy.

At the next general election, MPs will pile their John Lewis kitchen
appliances and home entertainment systems into a removal van never to be seen
again by the taxpayer. Meanwhile, new MPs will be going on a spending spree to
furnish their new second homes.

When businesses buy a large number of items regularly or pay contractors for
utilities or services, they negotiate discretionary prices based-on bulk and a
long-term relationship. Why can’t the Department of Finance and Administration
negotiate with retailers and service providers for MPs’ ovens, DVD players and
broadband contracts?

Why are MPs allowed to keep these items? They should belong to the taxpayer
and could be sold on to claim back money for the taxpayer, or recycled and given
to other MPs.

Instead of paying rent to landlords or paying the interest on MPs’ mortgage
repayments, the government could buy homes for MPs to use during their stay in
office? If an employer provides an employee with accommodation then the property
is given to a successor, or sold off and the money reinvested, when the
executive leaves his job.

This idea is not new. The prime minister will hand over the keys to 10
Downing Street at the same time as he hands the keys of office to his successor.
The address goes with the job ­ other MPs should do the same.

David Vine is managing director of GlobalExpense

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