Tax after coronavirus – ICAS contributes to the debate
Charlotte Barbour MA, CA, CTA (Fellow) reports on ICAS input to the current debate on tax reform.
The ICAS Tax Board, which takes the lead on formulating ICAS tax policy positions, has been considering the future of tax in the UK. There is a debate to be had about tax reforms that would produce a more efficient tax system and command support from the public; there are also public discussions taking place about ‘tax reform’, which is probably a euphemism for how to increase the tax take.
The need for tax reform
There are a number of longstanding concerns about the tax system. One important one is often referred to as the ‘three person problem’: people with the same gross income end up with different post tax incomes depending on whether they are employed, self-employed or operating through a personal service company. The coronavirus pandemic has not created this tax issue, or others, but it has shone a spotlight on some of them. For example, the operation of the Coronavirus Job Retention Scheme has been supported by the availability of real time PAYE information; by contrast it proved to be more difficult to create an effective scheme for the self employed and many fell through the gaps in SEISS. ICAS submitted evidence to the Treasury Committee Inquiry into the economic impact of coronavirus.
At the same time, policy makers and commentators are discussing the need for funds to support the rebuilding of the economy and to spend more on the provision of public services (such as the NHS, or support for the unemployed), whilst sources of revenues are likely to be reduced and fragile.
There appears to be a growing appetite for public debate about who should pay tax and how much they should contribute. ICAS has contributed to this debate and will continue to do so – we work in a positive and constructive manner to advise policy makers on legislation and to raise issues of importance to our members, individual taxpayers and businesses alike.
The pandemic may present the Government with an opportunity to generate public support for tax reform that has previously been difficult to achieve.
The ICAS contributions
In June ICAS issued a paper The Future of Taxation in the UK and in recent weeks ICAS has also submitted both written and oral evidence to the Treasury Committee’s inquiry into tax after coronavirus.
The Treasury Committee has noted that the reconstruction of the economy after the unprecedented fallout of the coronavirus crisis provides an opportunity to examine the tax system; to look at what the major long-term pressures on the UK tax system are, what more the UK can do to protect its tax base from globalisation and technological change, and whether such pressures should be addressed through tax reform. The Committee is also seeking evidence on what overall level of taxation the economy can bear, the role of tax reliefs in rebuilding the economy, and whether there is a role for windfall taxes in the post-coronavirus world.
There is plenty to debate and ICAS members were delighted to have a webinar hosted by the ICAS CEO, Bruce Cartwright CA, in which the Chair of the House of Commons Treasury Committee, Mel Stride MP, Treasury Committee member Alison Thewliss MP, and Director of Taxation in the Scottish Government, Lucy O’Carroll, discussed the Committee’s open inquiry ‘Tax after Coronavirus’. A recording of the webinar is available.
One aspect of the oral evidence given by ICAS, and also discussed in the webinar, was the interaction between UK and devolved taxes. To date, the devolved taxes have been designed primarily to address needs in the devolved jurisdictions, arguably without much consideration of how the devolution of tax powers should be coordinated as part of decentralising a highly centralised system. Nor is there enough ongoing consideration of how UK tax matters interact with the devolved taxes. This can be seen in particular in relation to process, for instance in the need to have a UK budget in the autumn early enough to allow adequate time for the Scottish budget to be put forward and scrutinised. The expertise of ICAS members – on both UK and Scottish taxes – is recognised and the Tax Board is pleased to be able to contribute to UK-wide debates about tax reform.
ICAS would like your views
The Tax Board regularly reviews its policy positions. It also responds to many tax-related consultations and calls for evidence issued by HMRC and HM Treasury. Please send us your feedback and comments by emailing email@example.com.