Following the creation of a new Office for Budget Responsibility two months ago, George Osborne launched another supposedly prudential and nonpartisan arbiter of policy yesterday — the Office for Tax Simplification.
Announcing the new body, he described the current tax system as “a spaghetti bowl of reliefs and allowances”. Perhaps still in awe of the sound-bite — certainly one of the better ones I’ve heard recently — the opposition, unions, and business groups gave a guarded welcome to the creation of the new office.
For their part, Labour and the unions said the new office must focus on closing loopholes which allow big companies to escape tax. “The worry must be that this is simply a softening up exercise for tax cuts for the rich, while ordinary people see services slashed and VAT increased,” said Brendan Barber, general secretary of the Trades Union Congress.
Whilst Shadow Treasury chief secretary Liam Byrne said: “You will see … wide endorsement for the principles of a simpler tax system which allows people to focus on their business affairs and profitability.” But, he added, for the new office to have any credibility it must be “independent”.
Richard Baron, head of taxation at the Institute of Directors, a business lobby group, also gave conditional endorsement: “This new Office of Tax Simplification is a brilliant idea, and we congratulate the government for getting a move on and setting it up so soon after coming to office. But we have to see results. Good reports will not constitute results. Legislation in finance bills will.”
The early signs are the office will struggle for true independence. It will be headed by Michael Jack, a former Conservative Treasury minister, whose appointment has already been questioned. John Whiting, formerly of PricewaterhouseCoopers and the Chartered Institute of Taxation, will also act as director, but his position will unpaid. (Regrettably there is no place for respected tax specialist Richard Murphy, someone I quote regularly on this blog.)
The office will be housed in the Treasury and staffed by civil servants and “private sector secondees”. It is unclear where these “secondees” will come from and who will guarantee they are acting in the “public interest” — rather than just furthering their career by getting an inside scoop on how to enable rich clients to dodge tax.
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