I'm appearing before the House of Lords Economic Affairs Finance Bill sub-Committee this afternoon to respond to questions on the government's new approach to taxation policy, anti-avoidance, disguised remuneration and corporation tax reform. I have only submitted written evidence on the latter, which will be published later, but I'll certainly be offering comment on all these issues.
In particular I expect to have a lot to say on the government's proposed changes in the way in which tax legislation is developed. I have some experience in tax consultation processes, having spent a lot more time in the Treasury over the last few years then this blog has ever implied. And I candidly think that the proposals to increase consultation are anti-democratic and will result in significant bias in UK tax legislation.
There are three reasons. First, to be consulted you need to be have the time available to take part without being paid. Only the rich and their agents can do that. Second, consultation focusses on the means and not the ends of tax law - and so distracts from the fact that the current ends of tax reform are to reduce taxes on wealth and high income and shift them to the lower paid. Third, this is a democracy. Outsourcing tax thinking to the Big 4 accountants and their friends is yet another act that undermines the democratic process.
So what can be done? Well, again three things. First, if there is to be consultation then it must be broadly representative and positively seek to be so. If necessary that means that payment must be made to those taking part. Second, parliament must have resources to commission its own reviews of legislation. thirdly, consultation must be on the ends and not just the means of tax law.
Until that happens we'll get the outcome noted by EU aid coalition Eurodad in a mail they sent me the other day:
As you may know, this year the EC extended the mandate of and expert group dealing with transfer pricing matters until March 2015, the EU Joint Transfer Pricing Forum (JTPF) which:
a) assists and advises the European Commission on transfer pricing tax matters;
b) works within the framework of the OECD Transfer Pricing Guidelines.
In February, DG Taxud opened a call for applications for non-governmental members for the expert group. Eurodad put forward an application (see below), however, the call for applications resulted in the selection of 16 members ALL from the private sector, including the big four. The group has one rep from each EU member state, plus 16 reps from the private sector. Affiliations for the latter are as it follows:
- CMS Bureau Francis Lefebvre (chairperson)
- Volvo
- Unilever
- Fiat
- BAE Systems PLC
- OMV AG
- Deloitte
- Andersen Legal
- Nokia
- GK International Tax Consulting
- Royal Dutch Shell
- LVMH MoetHennessy Louis Vuitton
- Berkshire Hathaway
- Ernst & Young
- KPMG
- PwC
- Sanofi-aventis
For more information, click here.
That's not consultation. That's law creation by business for the benefit of business. And at the very least that's anti-democratic, n
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Richard. In the late 1960s Sherry Arnstein published an article on participation in the planning process in the US. The article was widely recognised as a classic because almost every point she made applied more widely to participation in decision making and thus to democracy itself. Arnstein argued that: ‘There is a critical difference between going through the empty ritual of participation and having the real power needed to affect the outcome of the [decision making] process.’ Nothing much has changed.
Another innovative feature of Arnstien’s work was her ‘ladder of participation’ ranging from rung 1 – manipulation, to rung 8 – citizen control. Consultation is rung 4 and falls into the zone of the ladder Arnstein labelled ‘degrees of tokenism.’
Like you, I have been involved in (and organised) many exercises in consulation over the years, most of which I’m sorry to say have been tokenistic to a greater or lesser extent. That said, at the least they demonstrated that a dialogue with a range of interest groups had taken place, diverse and divergent opinions heard, and perhaps some accomodation of those views had been accepted and taken into account when making policy.
That was in the days of social democracy, of course. What your DG Taxud example illustrates, as does the behaviour of our own government, is that ‘the elite’ (however we might define them) are now so confident of the extent and breadth of their power and authority that they can dispense with any semblance of broad based consulation, let alone participation, in the policy process. In Russia nowadays I believe they refer to that form of democracy as ‘managed’.
Enjoy your Sub-Committee 😐
Andersen Legal disappeared years ago!
Maybe an EDM qualifying the meaning of “consultation” regarding parliamentary undertakings in lieu of of a bill of rights would improve matters if there’s nothing clearer on statute? This could define criteria to select a greater range of chosen participants, or at least require interests to be calculated and publicly recorded.
[…] I mentioned yesterday that I was to give evidence yesterday afternoon to the House of Lords Finance Bill Sub-Committee. I did so alongside John Whiting and Ian Menzies-Conacher (of Barclays) representing the Chartered Institute of nTax and two representatives of the Association of Taxation Technicians. […]