It’s time for an Office for Tax Responsibility

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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.