The Treasury Committee today calls for enhanced accountability of
Government efforts to simplify the UK’s overcomplicated and
burdensome tax system.
In a new report, the cross-party Committee of MPs concludes that
the UK’s overcomplicated tax system is an obstacle to economic
dynamism, creating compliance burdens, confusion and
disincentives to work or grow a business.
There are over 1,180 separate tax reliefs in existence, as well
as numerous ‘cliff edges’ littering the tax system, such as the
threshold for tax-free childcare and the VAT threshold for small
businesses.
The Committee concludes that the Chancellor’s decision to disband
the Office of Tax Simplification (OTS) – the independent body
responsible for advising on tax simplification – risks signalling
it is not a priority for the Government. The former director of
the OTS argued the Government would miss this “champion for
simplification" if the office were abolished.
The MPs argue that, given the Chancellor has stated his intention
to “make progress in simplifying the tax system”, it is right the
Government's performance be subject to public scrutiny. The
Treasury Committee must be a core component of that
accountability.
Should the Government succeed in receiving Parliament’s support
to proceed with abolishing the OTS, the Treasury should report to
the Committee annually on steps taken to simplify the tax system,
covering both new and existing taxes. Such reports should set out
the Government’s performance against tax simplification metrics,
what the Treasury has done to understand taxpayer needs for tax
simplification, and how the complexity of the UK’s tax system
compares with other countries.
Alongside the report, members of the Committee have tabled two amendments to
the Finance (No. 2) Bill (which gives legislative effect to
the Budget), due to be debated in the House of Commons on Monday.
Amendment 7 seeks to prevent the abolition of the OTS, while New
Clause 2 would require the Treasury to report annually to the
Treasury Committee on tax simplification should the OTS be
abolished.
Commenting on the report, , Chair of the Treasury
Committee, said:
“It’s widely acknowledged – including by the Chancellor – that
our tax system is over complicated, confusing and inefficient. It
contains numerous cliff edges which disincentivise work, business
growth and personal development.
“Disbanding the office established to champion tax simplification
risks signalling the Government is not serious about the task at
hand. Action needs to be taken, and public scrutiny of Government
efforts are vital. That’s why we’re calling for the Government to
report to our Committee each year on the success of the
Treasury’s tax simplification efforts.”
-Ends-
Further information
- The Treasury Committee held an evidence session with the
leadership of the Office of Tax Simplification in March. A video
replay, transcript, and further information can be found
here.
- The Committee is currently investigating tax reliefs. Further
information about the inquiry can befound here.
- The House of Commons will debate all remaining stages of the
Finance Bill on Monday 19 June.
