Despite their professed enthusiasm for having a bonfire of the quangos, in practice the Conservative Party keep on announcing new ones – and have rather run in to trouble when pressed to explain what’s going on the bonfire (both points I wrote about here).
The tally of new quangos the Conservatives is now at least 19, which sits rather oddly with the rhetoric about culling them. However, that doesn’t mean all the individual proposals are bad ones.
One in particular which appeals to me is an Office of Tax Simplification.
Regular readers may have noticed my love of tangling with bureaucracy. (I did though decide discretion was the better part of valour when an a US immigration official gave me a form with a footnote which didn’t make sense. To anyone else subsequently who has been befuddled by that footnote too: I apologise. I can only say I was thinkings guns, deportation, Guantanamo.)
One pattern that is regularly repeated is that an outsider, dealing with a process for the first time, can often spot ways it can be made simpler or easier. Sometimes those thoughts turn out to be erroneous because there is actually a good explanation for an apparently baffling process. But often the thoughts turn out to be spot on because those who manage the system have so many other factors to worry about that simplicity never quite gets a proper look in.
So the idea of creating a team who is dedicated to making tax rules simpler is a good one. Placing the team outside the usual Treasury and HMRC structures means it is unlikely to lose its focus on simplicity as it will have only that one reason for existing. The simplicity of purpose also makes for more meaningful accountability – a particular problem with quangos as I highlighted in my experiences with the Office of the Public Guardian. Is the OPG’s poor paperwork a matter of incidental detail, a symptom of a quango that is badly run or something that is the fault of those who wrote and passed the law it implements?
The short answer to that question is that none of the politicians of any party who may have to make decisions about the OPG’s future after the next general election seem to have the level of detailed knowledge about the Office of the Public Guardian’s work to judge.
That is a problem across much of the quango world, but for an Office of Tax Simplification the judgements will need to be made on the basis of how many proposals it makes, how many are enacted – and how good the reasons given by the Government are for rejecting the others. That will, at least for tax experts, make for a good, clear field of judgement.
But why make it a quango? The essential part of its success would be to have created a constructive tension between its drive for simplicity and government’s habit of complexity. That tension could be just as well nutured by beefing up a Commons select committee and adding an Office of Tax Simplification as its research arm – with the added bonus that this would also add teeth to Parliament’s attempts to be a genuine check on the actions of government.
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5 Comments
“One pattern that is regularly repeated is that an outside, dealing with a process for the first time, can often spot ways it can be made simpler or easier. Sometimes those thoughts turn out to be erroneous because there is actually a good explanation for an apparently baffling process. But often the thoughts turn out to be spot on because those who manage the system have so many other factors to worry about that simplicity never quite gets a proper look in.”
That is both very true and very succinct.
I love the idea of an “Office of Tax Simplification”. Whatever people’s opinion of taxation (and readers of this site are varied in their views), I have never met anybody who complained that the tax code was too simple. (“You know, what we really need in this country, Tom, is another thousand pages of tax regulations.”)
“But why make it a quango?” Well, as your paragraph quoted above notes, it is essential that it sit outside of ministerial control or influence, otherwise it will quickly become just a machine for providing prior justification for actions that have been decided around the Cabinet table. However, the suggestion that it be affiliated to parliament rather than government has some merit – and indeed precedent. I am minded of the Congressional Budget Office in the US. Make it non-partisan and resource it properly and it could be very useful.
I’m not sure, on three counts.
First, as Tom Papworth says, no-one ever complained about taxation being too simple; but people are very quick to note seeming unfairness when systems are simplified in a way that appears to penalise them.
For example, abolishing the lowest tier of income tax looked like a simplification until everyone realized that it effectively doubled income tax for the poorest. Then, all sorts of whorls and complexities had to be introduced to deal with the consequences without the Treasury losing face. Removing income tax on the first £10k of earnings, however, simplifies taxation for many while appearing to penalise no-one (although of course I recognize matters are more complicated than that).
So simplification needs to avoid being a sneaky way of raising taxes.
Secondly, why simply focus on tax? Benefits, planning, property law, vehicle law, drug laws (including alcohol & tobacco), local government finance, to name just a few areas, are riddled with complexity. No doubt for good reasons, but could simplification be found without major negative outcomes? Surely we don’t want permanent quangos for all these areas?
So, while I agree with you about the benefits of an outside perspective, shouldn’t all government laws, regulations, systems etc. have the opportunity for those affected by them to suggest simplifications and other improvements?
Thirdly, while the idea of beefed up Select Committees is definitely appealing, the US model of Congressional Committees doesn’t seem to have made for simpler laws. In fact the opposite might well be true. So how can we get stronger checks on Government without the kinds of pork barrel politics and over-elaborate laws that have bedevilled the US?
Two comments so far, but two high quality ones 🙂
Tom: the CBO model was in the back of my mind when I wrote the piece and, as you say, it’s one American political import that would be probably be for the good.
LW: agree that it’s not just about tax, though I think the reach and growth in complexity of the tax system is such that it does deserve special treatment. The issue with drug laws, for example, isn’t really about complexity – it’s about evidence and principles.
I laughed when I heard the phrase “Office of Tax Simplification”. Well intentioned, I’m sure, but somehow it put me in mind of Terry Gilliam’s “Brazil”.
I utterly and completely agree with everything Lonely Wanderer said.
With regards simplicity verses tax increases, an example would be abolishing exemptions but lowering rates. My understanding is that relatively few higher-rate taxpayers pay 40% on their earnings over £43,875 because they begin to qualify for ever-more-convoluted exemptions. If we were to abolish the exemptions then their actual level of taxation would rise. Putting aside questions of “fairness” and “progressive taxation” for a moment, this could be rendered tax neutral by dropping the rate. So (and here I pluck figures from the air) the top marginal rate could be dropped to 35% but many of the exemptions removed. The result could be calibrated to be tax neutral. However, the system would be cheaper to administer for both government (fewer HMRC staff) taxpayers (fewer accountants and lawyers) and companies (fewer finance officers). This would create a “Deadweight saving” that could be passed on to taxpayers, redirected into services or shared between them.
The same is of course true of the benefits system, too, as LW notes. In fact, they are increasingly entwined. I agree with Mark, however, that some of the other issues (e.g. drug laws) are not problems of complexity. However, it is true that in general laws are written by a chamber largely made up of lawyers in a manner that is primarily geared towards lawyers. The entire nature of government and legislation could be simplified if there was a cultural change. But I think that would involve biting off a rather larger chunk than would could easily chew.