The UK has an Office for Budget Responsibility. I admit I have my doubts about it, and its independence. There are good reasons for that. When it sits right in the middle of the Treasury and has no apparent independent funding and is not allowed to, for example, look at alternative policy proposals to those put forward by the government the idea that it is somehow free of the influence of the Chancellor is a little hard to sustain, although I would like to think it possible that it might be otherwise. We all benefit from a genuinely critical eye that if it seeks to offer constructive advice.
And in that spirit, and having looked at the fiasco that is this year's Tax Gap report from HMRC, isn't it obvious that we really do need an Office for Tax Responsibility in the UK?
The first thing I would say is that if we were to have such an Office it would have to be independent of the Treasury. An endowment fund sufficient to let it operate for ten years would allow for this.
A Board, made up of senior civil servants, but not connected to the Treasury, and a single representative from each party in the Commons with more than 30 seats might ensure sound governance.
The Office should report to the PAC. That is where the accountability should lie, I think, well away from the Treasury.
The primary task would be to monitor the tax gap. Ex-HMRC staff could be engaged on this, but no revolving door would be allowed.
Others might also be engaged. These could include private sector specialists and academics. But again, a revolving door straight back into large companies may not be allowed.
And the budget must allow for research to be commissioned on this issue from a variety of sources: one viewpoint would clearly not be enough.
What else might this Office do? Well, it could monitor tax proposals in advance of announcement. We would all do with preventing another Gordon Brown 0% corporation tax mistake, or the raising of personal allowances based on the claim that they take people out of tax.
And this Office's commentary could be published on budget day to provide some objective appraisal on the day. Research would have to be in house in that case: real expertise would be needed, so the budget will have to allow for it.
All this, I stress, is not a full fledged idea. It is just an outline right now. But I think it's an avenue to pursue, not least because it would stop HMRC publishing self congratulatory nonsense and would also make them accountable to someone with the means to hold them to account- which is not the case at present.
Thoughts?
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All sounds eminently sensible – details to be ironed out of course, but the principle looks sound. But sadly a cynic might point out that politicians get into politics for power, and that power manifests itself principally as ‘spending other people’s money’. Relinquishing control over any aspect of the process of getting hold of that money is going so far against the grain that politicians just won’t wear it. The only time they’ll give up power is if it can be clearly demonstrated to equate to responsibility for something which has just gone, or is inevitably going to go, wrong/unpopular – on which note, expect to see genuine devolution of powers to local councils after the election so they can implement the austerity measures. But relinquish power/discretion in respect of taxation? Never.
Limiting Parliamentary representation on the ‘OTR’ to Parties with 30 seats in the Commons would be highly inequitable, Richard, as long as we have the ‘First-past-the-post’ system. It would exclude the Greens, UKIP, the SNP, Plaid Cymru, and the Northern Irish parties. Once we have some form of PR, then a limit of 20 seats might be reasonable. I suspect the minor parties would still argue strongly against it, but they would then not have the argument of being under-represented in the Commons in their favour.
As a matter of fact small parties can’t be on everything
I was reflecting that
Spot on. I might argue a little re the composition, I don’t like the preponderance of Civil Servants, but that is nit picking. I feel it an idea whose time has come, in fact well overdue. How do we move forward? How about campaigning among the professional bodies to make it their own policy?
I may mail them
How about for ICAEW a proposed Resolution at the next AGM?
In the mean time how about an article for Taxline, ICAEW’s Tax Faculty’s monthly mag.
Or an article for Taxation magazine.
I have contacts within the above, do you want to write the articles or shall I ?
This sounds like a co-authoring exercise
Why not mail me?
As Richard says, this is not a fully-fledged idea, and as Ian says it was raised at the Mazars/ARC parliamentary debate. So, to save you the trouble of writing, so far as Taxation is concerned I don’t think this is a runner as an article.
Personally I am not convinced that it was worth inventing the Office for Budget Responsibility when we have a perfectly good National Audit Office that could have had its role expanded, and that crucially has the right to see even the confidential HMRC details. I certainly wouldn’t create a separate body just to monitor the tax gap, because I’m not particularly convinced that it is a useful number when aggregated. Again, let the NAO decide whether the work and the presentation by HMRC is correct and appropriate.
Disappointing on all counts Mike – especially on such a massive issue as the tax gap.
In fact, I fnd it bemusing that you say this is of no significance and checking it’s validity is inconsequential when you are so animated on the issue of aggregates elsewhere on this blog. That appears to make no sense at all
Tax is a macroeconomic issue. Are you denying that (because that is your implication, and if so you are fundamentally wrong, even in your understanding of tax)? It appears you are
But I do believe in editorial freedom
A very similar idea was proposed at a Parliamentary event this July, hosted by Mazars/ARC and chaired by Margaret Hodge. Richard was there and spoke. The various rep bodies also attended, so they may already have a view.
http://blogs.mazars.com/letstalktax/2014/07/04/the-tax-transparency-debate/
http://www.taxation.co.uk/taxation/Articles/2014/07/15/327851/clear
I admit I do not recall it – and that I can see the links do not cover it
But if they have a view they need to be open about it
Much as I hate to disagree with you, Richard, I think I have to disagree with you over this. The big parties are in decline, both in terms of their votes and their memberships, and – frankly – the way they are going they will soon be disappearing up their own rear-ends, and deservedly so. They represent a neoliberal consensus that serves the interests of international financial capital, not the people. You know that as well as I do. So why insist on giving these idiots a monopoly voice? It’s not as if we even have a fair voting system. Are you _really_ going to keep the Greens, the SNP (the majority party in the Scottish Parliament) and Plaid Cymru off your OTR? Perhaps it’s not such a good idea after all!
As I said it’s not a fully fledged idea
I am open to changing it
I’m glad that you’re flexible on this, Richard. Our present system reflects what Steven Lukes calls ‘the third face of power’ only too well. It is far subtler than Putin’s set-up in Russia, but reflect on the mere handful of people who own the bulk of our media, and on the output of that media, and it is all too easy to see how public opinion in this country is manipulated and controlled. ‘It’s The Sun wot won it’ was far too close to the truth for comfort.
The one area that is still relatively free is the internet (and Putin wants to control _that_ in Russia!), but for how long? With RIPA and DRIP already on the Statute Book, and a Snooper’s Charter threatened if the Tories are returned to power, as well as a repeal of the Human Rights Act and withdrawal from the European Convention on Human Rights, that one area of freedom will not be safe for much longer. Take heed!
I too worry about how long there is any real freedom
And of course the political parties have been sensitised to it. See Jolyon Maugham’s blog from 13 October.
http://waitingfortax.com/2014/10/13/a-better-way-of-doing-politics/
I, personally, am very interested. On the whole, I don’t think my readers are anything like as interested, hence it is not a runner for an article – the words “of no significance” are yours, not mine.
If, however, you or anyone else feels strongly about what should appear in taxation, the advertisement for my successor (I retire in March) is here…
http://www.taxation-jobs.co.uk/job/349638/editor-taxation-magazine