Opinion Former Article

Institute proposes improvements to scrutiny of tax legislation

The Chartered Institute of Taxation (CIOT) has made a number of proposals for improving parliamentary scrutiny of the Finance Bill and other tax legislation.

In a submission to the House of Lords Constitution Committee’s inquiry into the passage of legislation through Parliament, the CIOT proposes:
·         The Finance Bill Public Bill Committee takes oral evidence from tax experts and others;
·         More effective liaison between select committees and the Finance Bill committee;
·         Increasing the resources available to Parliament for scrutinising tax matters;
·         Using technology to make it easier for those outside Parliament to comment on Bills, e.g. an online facility to input comments by clause numbers, so MPs can see who says what against each clause;
·         Asking the Office of Tax Simplification to publish simplification assessments of new tax proposals.

The CIOT also calls for a debate on whether the House of Lords should play a greater role in scrutinising tax legislation as it goes through Parliament, without detracting from the powers of the House of Commons over tax matters.

Commenting, John Cullinane, CIOT Tax Policy Director, said:

“Parliament does not do a particularly good job of scrutinising tax legislation. With a few honourable exceptions, MPs on the Finance Bill Public Bill Committee take little part in proceedings; such debate as there is, can often be characterised by political knock-about rather than diligent technical scrutiny. The absence of meaningful House of Lords scrutiny of Finance Bills during their passage means that flaws in Commons scrutiny are all the more glaring. These deficiencies are only partly compensated for by the pre-legislative work of select committees of both Houses.

“Successive governments deserve credit for the improvements they have made to pre-legislative consultation on tax matters over recent years. The move to a single annual fiscal event, with more early-stage consultation, is another positive step. When the pre-legislative consultation approach is followed, a higher quality of tax law generally results. But flawed legislation does still reach Parliament – sometimes because concerns raised by the tax profession and affected groups have been ignored, but most typically because the consultation process has been curtailed, particularly in its early stages. This reflects the sheer quantity of tax legislation, which also makes it likely that problems are only spotted late on. Post-implementation review to facilitate a shared public learning from experience is also virtually non-existent. Parliament has an important job to do and it could do it better.

“In our submission to the Lords committee we set out a number of ways in which the scrutiny of tax legislation could be improved. These focus on increasing opportunities for MPs to hear external evidence, providing greater support to parliamentarians carrying out this work, and trying to get more value from the tax expertise in the House of Lords.

“For example, giving the Finance Bill Public Bill Committee the opportunity to take evidence from, and question external witnesses, at the start of their proceedings could really help them get to grips with the legislation they are scrutinising. As well as tax experts and economists they could question representatives of groups affected by the changes. Labour and SNP frontbenches support this change, as do the chair of the Treasury Committee, a Conservative, and her predecessor. We hope the Government will come round to it as soon as possible.

‘The need for effective Commons scrutiny is greater for tax legislation than it is for other bills. Whereas most bills go through a full set of parliamentary stages in both Houses, Finance Bills and other tax bills get just a cursory debate in the Lords, with no ability for the upper House to reject or amend. The history of this is well-known and we would not want to return to a situation where an elected government, commanding a Commons majority, can be blocked by unelected peers from raising the money it needs when it has made a clear political choice to raise those funds.

“However, the mundane reality is that most tax legislation is highly technical in nature, and most of the scrutiny required is a case of identifying whether it will do the job being asked of it, without throwing up unintended consequences. We think that, with a bit of imagination, there is potential for a greater role for the Lords in this area, enabling peers to, in effect, suggest changes to Finance Bills, and require the Government to respond to their concerns, while ensuring that the elected House’s basic tax policy choices cannot be frustrated.”

Notes for editors

1.       CIOT’s submission can be read here

2.       The Chartered Institute of Taxation (CIOT)

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.

The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.

The CIOT’s 18,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Hamant Verma, External Relations Officer, 0207 340 2702 HVerma@ciot.org.uk (Out of hours contact: George Crozier, 07740 477 374)

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