Following the oral evidence we heard in January, and the submission of written evidence, the Treasury Select Committee has published its report on the future principles of tax policy.
As our Chairman, Andrew Tyrie, said, our aim, as a cross party committee, has been to produce a number of tax policy principles which are accepted across the House. We intend to consider the measures contained in future Budgets against these principles.
Our report concludes that tax policies provide the framework for our tax system, and that the tax raised by these policies taken together funds the UK economy. We recommend that tax policy should be measured by reference to the following principles.
Tax policy should:
be fair. The Committee accepts that not all commentators will agree on the detail of what constitutes a fair tax, but a tax system which is considered to be fundamentally unfair will ultimately fail to command consent.
support growth and encourage competition.
provide certainty. In virtually all circumstances the application of the tax rules should be certain. It should not normally be necessary for anyone to resort to the courts in order to resolve how the rules operate in relation to his or her tax affairs.
provide stability. Changes to the underlying rules should be kept to a minimum and policy shocks should both be avoided. There should be a justifiable economic and/or social basis for any change to the tax rules and this justification should be made public and the underlying policy made clear.
The Committee also considers that it is important that a person’s tax liability should be easy to calculate and straightforward and cheap to collect. To this end, tax policy should be practicable, and the tax system as a whole must be coherent. New provisions should complement the existing tax system, not conflict with it.
You can read the full report here.