Jolyon Maugham is arguing for something I have long felt necessary this morning, which is an Office for Tax Responsibility. In a new blog in which he rightly criticises the wholly inappropriate allocation of the benefit of £30 billion of income tax reliefs in this country he concludes:
We have no mechanism for assessing what public good we achieve with this £30bn. The absence means our political class need not confront the question. And what they can pretend they don't know they can pretend they needn't remedy. This state of affairs is convenient to them. Because the noise made by the losers from tax decisions tends to drown out the applause from those who've won.
But there is an answer. And a precedent.
Interest rates decisions were once heavily politicised. Were they still, now, in the hands of the Government the UK would be a more dangerous place. After seven years of near zero interest rates could any Government hold the line between depositor pensioners and the borrower working age population? But, devolved to the Bank of England, the political heat has simply evaporated.
As it was with interest rate decisions, so it could be with tax reliefs. Value for money assessments, decisions around functioning, decisions around shape; all these could be devolved to an independent body such as the Office for Budget Responsibility. Over time, and insulated from political heat, it could reshape tax reliefs to operate in the public interest.
I have named this body, and Jolyon has not. Otherwise our suggestions are close enough to suggest substantial common ground.
Admittedly I would not have this as a decision making body, unlike the Monetary Policy Committee (although as many will know I have long questioned how independent its decisions really are) because I believe in keeping the politics in politics for reasons of accountability. But to have such a body capable, quite independently of HMRC, of assessing tax policies and their impact and HMRC's effectiveness in delivering tax revenues (which would necessarily require a proper assessment of the tax gap) is to me an absolutely essential reform if we are to get a proper grip on the tax system, social justice, fiscal management and the appropriate balance between fiscal and monetary economic policies.
It's time for parties to commit to its creation, I suggest.
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Quite right too!
Time (long overdue) for the huge amounts of corporate benefits and private wealth tax allowances to be put under the public spotlight for those who pay for them to have a vote on whether they agree with them.
New Labour had 13 years to shine some light into this murky world, shame on them for missing the opportunity when they had it!
Hear, hear.
RM – this was my idea, if you look back on your blogs…………..
Stephen
Let’s differ, as ever
Richard
Decison-making or not is fundamental. An OTR that reports and advises on the impact of tax proposals and operations would be useful but decision making must stay with elected politicians. One of the core political components of neoliberalism has been to remove decision making from elected bodies into the hand of unelected ‘technocrats’ (WTO, EU Commission, MPC, etc.). The electorate’s resentment of this drives populism as well as providing much of the energy behind demands for Scottish independence or Brexit.
I’m pleased you acknowledge the importance of accountability. It’s becoming too common to see advocates of progressive policies going along with the neoliberal hollowing out of democratic institutions out of despair with politicians.
I stress, the last thing I want is to hollow out democracy
Jolyon and I may differ on this
I agree with the idea of tax responsibility. That’s probably the policy that delivers the idea of reviewing what we get for the privilege of the rich that I mentioned in the Fairness comments above.
Political accountability is vital though. I was a bit alarmed on QT last night when people seemed in favour of removing politicians from control of the NHS. I see the point about swings back and forth between left and right being disruptive but that’s probably more the fault of the electoral system than the politicians. It also begs the question that if the minister of health doesn’t have oversight of the NHS, what does he do? I’m not a fan of Jeremy Hunt but at least he is an elected official. I’m inclined to believe it is better to have a minister that is accountable than have a minister appoint an official who isn’t.
Elected politicians have to be in control
The alternative is the corporate state
I think this is a very good idea.
You can even trace it to “Yes, minister” I think. I don’t remember the name of the episode any more, but I think the idea in the program was that all legislation should include a list of objectives and a criteria for failure. All legislation/regulation would then have to be assessed against the original goals to determine if it achieved them or not. It still strikes me as an incredibly good idea (even if terribly difficult to implement). Almost like applying the scientific method to policy making. Obviously you’d have to start by creating such assessments for past legislation in order not to favour status quo too much. Sir Humphrey was appalled though…
I always thought that program was pure genius…
The monetary policy parallel is not great though. There was a good consensus on what the target of monetary policy should be and the government has retained the ability to determine what monetary policy should achieve (which is an almost exact implementation of the idea above). For the tax system as a whole this seems much more complicated…
I have argued for such purposive legislation many times