I'd love to believe in the ICAEW Tax Faculty's project in what they say is 'thought leadership' called 'Towards a Better Tax System'. The only trouble is, I can't. The reason is simple. I see no evidence of thought leadership within it, but I do see lots of evidence of self-interested thinking. They're not the same thing.
In the prospectus for this project the ICAEW claims that:
Set out in this document are key challenges which policy makers are currently facing and the important issues which the ICAEW Tax Faculty will now be addressing
It's hard to tell if the word 'the' before the word 'key' has been deliberately omitted or not. Certainly the sentence construction is poor without it, and I assume that a simple sign of omission. But if it was omitted then the resulting key issues are wrongly identified and it was not omitted then the claim that the resulting work is thought leadership is incorrect. The latter would require some indication of ability to think beyond the framework of self interest and to consider the needs of others in the tax system. But this document certainly does not do that.
That's because only three key issues are identified. They are:
1. The role of tax in society.
This issue the paper addresses by saying:
Tax is one of the foundations upon which society is built and tax systems should reflect society's ambitions while respecting the important role that enterprise and business play in creating prosperity.
But just think what it does not say, such as:
- What society is
- Why tax is key within it
- Why subversion of that role threatens society
- What society's ambitions are and how they are determined
- Why enterprise is so important that it justifies being considered in this sentence when other issue are not
- What prosperity is.
These are massive oversights. But they're not as bad as moving in the next sentence to say:
Tax systems are under pressure due to increased complexity and uncertainty. The constant amendment of existing rules means that the volume of tax legislation continues to grow, caused partly by governments' perceived need to launch new initiatives and to counter tax avoidance with highly complicated anti-avoidance rules
I'm completely baffled. How one gets to this point so early in the document and when considering the role of tax in society is entirely beyond me. For the sake of the record in Closing the Floodgates I (and my co-authors) defined the roles of tax in society as being to:
â€šÃ„¢ Provide public funds;
â€šÃ„¢ Redistribute income to reduce poverty and inequality. Progressive forms of taxation, are one of the main means by which wealth is redistributed in any society;
â€šÃ„¢ 'Reprice' goods and services to ensure that all social costs of production and consumption are reflected in the market price;
â€šÃ„¢ Strengthen and protect channels of political representation;
â€šÃ„¢ Provide a tool for the management of an economy, usually in combination with government borrowing.
Not one of these issues is mentioned by the ICAEW. Instead the ICAEW summarises its introduction to tax and society with this paragraph:
And tax systems are also under pressure because, throughout the world, governments face a challenge to deliver public policy objectives while supporting enterprise. Governments are often required to raise greater tax revenues while facing downward pressures on headline tax rates.
Which may or may not be true (because the ICAEW is not an independent participant in this process, it being one of those who brings pressure to bear for lower headline tax rates) but however viewed this is as far away from being a 'key' issue as it is about possible to be in an introductory document.
2. The Trust Gap.
This is the second issue the ICAEW addresses. This is a Loughlin Hickey theme. He raised at a Philip Hardman lecture at the ICAEW. But whilst the profession (and Hickey) continue to endorse the role of accountants in tax havens the ICAEW is morally bankrupt when raising such concerns.
Now it so happens that I agree with the ICAEW that:
Tax systems can only function effectively if there is underlying trust,based on transparency, honesty, integrity and mutual respect.
But I do not believe that they are committed to those objectives, and nor do they require that there members be so. Harsh words maybe, but true. Hickey's commitment to tax havens proves it. When the ICAEW tells its members to quit these places I'll believe them. Until then this statement is pure hypocrisy.
3. The challenges ahead.
The ICAEW says there are three of these:
- deciding how much business should contribute in tax;
- proper training for people at HMRC
- getting the use of technology right.
And that's it! Apparently that's all we need to think about.
The poverty of thinking in this document will be apparent as a result to anyone but a self interested accountant. Far from thought leadership it is a determined and ill-disguised attempt to promote the cause of lower taxes imposed with a lighter touch and less regulation for business as a whole.
That's an exercise in greed promotion. Since when has that been thought leadership?
I despair of my own professional institute and am ashamed that it can produce something like this when I see other professions (medicine for example) populated by people of real intellect, genuine social concern, broad imagination and above all open and enquiring minds. If there's ever been one of those at the ICAEW it long ago turned out the lights as it abandoned a sinking ship.