Tax policy-making around the world is under-resourced and
undervalued; it is controlled by a narrow group of people,
often to the exclusion of other government departments and
external organisations, and politicians have failed to engage
the public in serious discussion about the subject.
These are the key conclusions of "Structures, processes and
governance in tax policy-making: an initial report", which was
compiled by Christopher Wales and Kit Wales under the auspices
of the Oxford
University Centre for Business Taxation.
draft report looked at how tax policy was formulated in 10
jurisdictions: Australia, Finland, France, Germany, Ireland,
Jersey, New Zealand, Sweden, the UK and the US
Christopher Wales said the aims of the study were to raise
the profile of tax policy-making; develop a benchmarking
process; create a knowledge base; highlight differences between
countries; explore concepts of good practice and inform those
involved in the process.
"We found it difficult to find anyone with anything positive
to say about the role of politicians in tax policy-making,"
Christopher Wales said, when presenting the
study’s findings at international conference of
tax administrators, executives and advisers, trades union
representatives and non-governmental organisations in Oxford on
March 8 and 9.
The authors were not critical of the tax policy-making
process in all of these locations, but could not name any where
they thought the approach was completely successful.
"There are several examples in our subject-countries of good
structures and governance around some aspects of the tax
policy-making process. However, there are no countries in our
sample where the process is strong in all its parts," the
When unveiling the draft report, Christopher Wales said
ideally the study would have looked at more countries in
Eastern Europe, developing countries such as the Brics (Brazil,
Russia, India and China) and jurisdictions in Asia. He said he
hoped the report would only be the start of research into tax
policy-making around the world, including an examination
of the role of intergovernmental organisations, such as the EU
and the OECD.
In a speech
to the conference, David
Gauke, the minister responsible for the UK tax system,
highlighted the multi-stage consultation that took place before
the Finance Bill in 2010 and 2011. "The relative lack of
changes to the Finance Bill in 2011 shows the benefit of early
engagement," he said.
Gauke said, however, that the government would always need
to retain some flexibility on tax policy: "For example, we
wouldn’t consult on tax rate changes or where
there is a risk to the exchequer."
Different points of interest
The report, which was put together through desk-based
research and a series of face-to-face interviews in the 10
jurisdictions, looked at four elements of the tax policy-making
process: the part government plays; how external institutions,
such as academia and think-tanks, are involved; the role of the
legislature and the steps taken to seek the consent of
taxpayers to changes in the law.
The authors make 26 recommendations, though none
are specific to any jurisdiction. These cover, for
example, better inter-departmental coordination, including
between the tax policy and tax administration departments;
post-implementation review of tax changes; the creation of a
parliamentary committee on taxation and a formal process of
consultation with taxpayers.
"Many of the recommendations are inter-connected and some of
them would be liberating, in the sense that their
implementation would allow a cascade of benefits to flow down
through different parts of the process, achieving a significant
step-forward in quality," the report states.
Christopher Wales said there were possible reasons why
external bodies were not more involved in tax policy-making in
some countries: "Business tax doesn’t tend to be
what trades unions are expert about. And where there is no role
for academia and government, theoretical ideas are seen as
value of academics and nothing more."
The report will be finalised and published after the Oxford
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