Parties should tell us where they stand on tax

The conference season has concluded, and what the main parties appear ready
to say about tax, they have said. Which, in all honesty, is not very much at
all.

The Conservatives took an enormous risk in revealing their plans to make £7bn
of cuts, but since shadow chancellor George Osborne’s speech it has become quite
clear that even a sum as large as that will do little to touch the huge public
deficit any new government will be grappling with.

This week economists at PricewaterhouseCoopers estimated that up to £26bn of
tax increases will be needed each year, or a 17% cut in public spending. If PwC
is right then we can expect a host of changes once the election is out of the
way.

For the Tories, Ken Clarke, the shadow business secretary, revealed last week
his belief that the tax code is too long ­ further evidence that substantial
change is on the way even if he declined to provide any detail on the matter.

A correspondent to this paper pointed out we were a little unfair in
demanding so much detail since Osborne had supported the creation of a Tax
Simplification Office.

But it’s time we knew what was on the politicians’ minds. Chancellor Alistair
Darling’s pre Budget report, due next month, might go some way to telling us
what Labour might do, but it would offer few clues about the thinking in the
Tory camp. If tax increases are on the way, clarity would give us some way of
preparing for what is to come. Without that we can expect endless speculation
between now and the election.

And this is because speculation and uncertainty is potentially damaging,
especially if it touches on areas other than the headline rates. If individuals
and businessmen develop the idea that any number of reliefs and allowances could
be targeted to claw back revenue, it might compel them to adjust business models
as a means of compensating for what they expect the changes to be.

The one thing business doesn’t need is more uncertainty in these difficult
economic times.

Will the parties clarify their positions? It’s very unlikely.

The shadow chancellor may have taken a risk on letting us know just how
things will be, but it’s probably fair to assume that policy on specific
measures is either underdeveloped or will be played very close to the chest of
the politicians who will have to implement it.

Which is a shame because, as is pointed out elsewhere, talk on public
spending cannot take place without some talk on tax. The two go together. But so
far everyone has avoided elaborating on tax. If the politicians really wanted to
take to
a risk they tell us about that too.

Watch
the Accountancy Age TV discussion on the political parties’ tax policies
here