Tuesday, 20 July 2010

Office for Tax Simplification - more corporate welfare on the way

The Government has today established the Office for Tax Simplification (OTS) - a seemingly temporary quango (I thought the ConDems were for cutting them - oh, not when they can appoint their mates to them*) that will report to George Osborne in time for the March 2011 Budget.

The Treasury Minister David Gauke said,

The tax system created by the previous government was overly complex and has made the tax affairs of millions of families and businesses across the UK extremely complicated

Are the tax affairs of millions of families really 'extremely complicated'? Most people are on PAYE and it's a fairly simple system that requires little input from most workers.

One could argue that tax credits are quite complex, but the new OTS "will not deal with tax credits". In fact it won't deal with families' tax concerns at all, it will only look at business taxes and reliefs. Gauke's waffle is simply a cover for helping the Tories' business chums - or, more simply, a lie.

George Osborne tells us, on HM Treasury website, "simpler, more competitive taxes will help us show the world that Britain is open for business". Indeed, Gauke also adds that the OTS will "inform us in making the right reforms to the tax system that will help to pave the way to bringing more international business to the UK".

Cut corporation taxes and the economy recovers - hey presto! - try telling that to Ireland or the Baltic states. The June Emergency Budget of course announced cuts in corporation tax down to 24%, as part of a £24.7 billion package of corporate tax breaks over five years. Expect the OTS to recommend more corporate welfare when it reports next year.

Of course, what any sensible government would establish is an Office for Tax Responsibility. The proposal is spelt out by Richard Murphy here.

*The OTS will be chaired by former Tory MP Michael Jack, with John Whiting serving as Director. Whiting advised corporations on tax policy at PricewaterhouseCooper for many years.

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