Improving the quality of debate around tax is something I feel strongly about. So I was pleased to be asked to write here about PwC’s campaign to extend the debate to a wider group of taxpayers than is often the case.
This blog highlights the range of perspectives and opinions on tax reform, yet it’s still possible to find common threads between them. This is one of the reasons I think it’s important for discussion about tax to move beyond the profession, politicians and academia. It’s easy to make assumptions about what people think about tax: it’s too complicated, too dull, and all that matters is how it affects me. The discussions we’ve held for our Paying for Tomorrow campaign give the lie to all these things.
I’ve long felt that there needs to be a more strategic look at the tax system. The UK currently raises about £600bn in tax revenues each year – how are we going to raise that in a future world where the emerging economies are the bigger producers and employers, and have greater GDP? How will the UK raise the taxes it needs to run the country; will it be from business, income, wealth or sales? We need to think about what our future economy is going to look like, and then get our tax system in tune.
Dating back over two centuries, our tax regime needs a thorough overhaul – and I recognise that PwC, as the largest tax business in the UK, has a responsibility to be part of that change.
Our campaign is about pulling together views on building a tax system fit for the future, and the principles that should underpin policy. Crucially, it involves talking to all groups of tax payers.
So in June we commissioned Britain Thinks to bring together 22 representative members of the British public to have their say. Our Citizens’ Jury spent two days listening to a range of experts before debating and reaching their verdicts. We recently held a similar forum for businesses, again a real cross section of sizes and industries. And we’re currently running a major student competition, offering £20,000 for the best essay on how the tax system should change to improve job prospects. We want to engage with the people who will be most affected by the tax policies put in place now.
We’ll be drawing together the outcomes in the spring, but one of the most striking observations so far is the consistency of views. The main themes include:
- People want far clearer and more transparent communications on tax – both the purpose of policies and how taxes are being spent. Individuals and businesses are more likely to support policies they understand.
- While everyone recognises that tax is governed by politics, more must be done to counter political short-termism and encourage a more sustainable approach to policy making. Some of the ideas we’re hearing echo recent suggestions made on this blog by Stephen Herring and Jolyon Maugham for independent scrutiny of costings.
- Tax simplification is crucial and people are more likely to accept the trade-offs that come with say streamlining VAT or reducing the number of reliefs, if they understand the big picture goal and are confident progress will be made.
Perhaps for me the most illuminating part of the research is the willingness of taxpayers to put aside self interest. For instance our Citizens’ Jury rejected the idea of a mansion tax, even though none of their homes would touch the threshold. They just didn’t like the principle. It is important that we don’t make assumptions about different groups of taxpayers, and too often this has been the case.
Ultimately comprehensive tax reform can only be achieved if people buy-in to the common goal. And the only way to find out what people really want on tax is by speaking to them.