Is there a way out of the tax labyrinth?

Tax Labyrinth


Tax LabyrinthChas Roy-Chowdhury, ACCA’s (the Association of Chartered Certified Accountants) head of taxation today launched a new discussion paper called Is there a way out of the tax labyrinth?

The paper recommends establishing two groups to help the Tax Law Rewrite Project’s (TLRP’s) extensive remit, which would work in parallel to and share information with the TLRP about tax policy in the UK.

The umbrella term for the new ground breaking tax organisation, which ACCA first proposed in the year 2000, would be the Tax Policy Committee (TPC).

The first of the new bodies within the TPC would be tasked with simplifying existing tax legislation, with targets for reduction of legislation to remove burdens and unnecessary administration.

The second body should then be responsible for pre-legislative scrutiny, offering a much more considered approach to tax law, putting an end to reactive and rushed through tax laws.

Chas Roy-Chowdhury said:

“The ultimate aim of establishing these two groups is to reduce tax errors and loopholes. Experts would be drawn from business, academia, MPs and members of the House of Lords, as well as HM Revenue & Customs and HM Treasury.

“The cost of the complexity in the tax system is a burden on the UK economy. But real progress is difficult to achieve given the strong link between tax policy and electoral success. A deeper understanding of tax policy is needed to understand more fully the opportunities for cultural and political change.”

ACCA is calling for the creation of the TPC quickly. The two new bodies to be established as a part of the TPC are considered vital at a time when tax is central to the political process, especially with the April 2009 Budget imminent. But the discussion paper’s proposals are sufficiently flexible to also allow for a gradual roll out.

Mr. Roy-Chowdhury concluded:

“We believe that the issues identified in our discussion paper should be addressed urgently to benefit the UK economy as a whole. It is vital for the government to ensure – now more than ever – that the UK’s tax policy is transparent, certain and simple to understand for individuals and large and small businesses alike. Knee-jerk changes to the UK’s tax system must be consigned to the history books. We consider the new umbrella body would work with Governments in emergency situations as in the current case of seeking to devise and implement a fiscal stimulus package and would not shackle political intention and accountability.”

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