A Tax System For The Future
Following the Conservative Party’s somewhat surprising victory in the UK general election, business groups, including the Federation of Small Businesses, have been quick to offer the new Government their vision of a tax system for the future. Now, they say, is the time for the Government to really take the bull by the horns, finish the job it started in 2010 and deliver comprehensive, pro-growth tax reform. Well, I wouldn’t hold my breath. The previous coalition government, within which the Tories had the largest say on policy, got off to a good start by establishing the Office of Tax Simplification (OTS) five years ago. As its name suggests, this independent body was charged with recommending ways of simplifying the British tax system, which, just like many other country’s systems, has become a Byzantine maze that confounds most taxpayers, and sometimes even the tax authority itself. But what has the OTS achieved? Absolutely zip. But, actually this isn’t really the OTS’s fault. It has been reporting regularly since 2010 and come up with lots of useful ideas. It’s just that the Government has ignored them. And will probably continue to do so. Indeed, there’s nothing really in the Conservative manifesto to suggest anything remotely radical is going to happen to the tax system. But then the UK is not the first country to fail at tax reform. And it won’t be the last. For a government, bringing about comprehensive change to the tax framework is probably akin to rebuilding a vehicle while it’s still moving. It’s not that it can’t be done – it’s just that as long as the money keeps rolling in, governments care little about how long it takes an individual or company to complete a tax return.