Political parties should think twice before launching ‘rabbit out of a hat’ tax policies during the election campaign, where they commit themselves to a new idea or major reform out of the blue without consulting or preparing the ground in advance, says the Chartered Institute of Taxation (CIOT).
The CIOT is encouraging all the parties to follow eight principles of good tax policymaking in their manifestos and other policy announcements during the campaign. These argue that the tax system should be –
- Clear – unambiguous tax law, with full and accessible guidance, so people can understand how much tax they should be paying and why
- Simple – avoid tweaks and gimmicks which make the tax code unnecessarily long and complex
- Certain – making use of ‘road maps’ and other forward guidance, and avoiding retrospective taxation, so businesses and individuals can plan ahead with confidence
- Equitable - treating taxpayers in similar situations comparably wherever possible, and avoiding injustices and traps for the unwary
- Just – with a fair balance between the powers of tax collectors and the rights of taxpayers, and appropriate safeguards and oversight to protect the latter
- Accessible – enabling all taxpayers to engage meaningfully with the tax authorities, and showing flexibility to individuals with particular needs
- Joined-up – ensuring tax and benefits systems interact effectively and coherently, and different government departments and devolved administrations work closely together on overlapping issues
- Inclusive – with policy and legislation consulted on in a wide and meaningful way
CIOT President Glyn Fullelove said:
“Election manifestos are an important part of the democratic process and voters need to know what policies a party would pursue in government. But parties should be careful not to make hasty commitments now that they will come to regret later.
“This is especially true of a ‘snap election’ like this one where manifestos are likely to be being pulled together in a hurry.
“In finalising their manifestos over the next few days the parties should keep in mind the principles of good tax policymaking, and test their plans against them. Few will disagree with any of these principles but sometimes a tax change which sounds a good idea can have unanticipated impacts or practical challenges. In government the consultation process can iron a lot of these out, providing parties have not boxed themselves in beforehand either with excessive detail or with unduly hasty implementation timetables.
“This applies in particular to significant structural reforms. While a change in a tax rate or level of an allowance will, in most cases, be fairly easy to implement at short notice (though at the expense of taxpayer certainty), major structural changes will generally benefit from being exposed to thorough multi-stage consultation to expose any unforeseen consequences such as groups who might unintentionally be caught in the scope of the change.”
This call by the CIOT builds on the recommendations for better tax policymaking in the Better Budgets report, produced in 2017 by CIOT, the Institute for Government and the Institute for Fiscal Studies.
Notes for editors
The Chartered Institute of Taxation
The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.
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