07 December 2017

The Treasury’s newly published timetable for future Budgets shows that the move to one fiscal event a year can bring improvements in tax policy making, says Alice Lilly.

The Chancellor’s decision to scrap the Autumn Statement and move to one fiscal event a year drew on recommendations made by the Institute for Government, the Chartered Institute of Taxation and the Institute for Fiscal Studies.

We argued that moving to one fiscal event gives the Government space to do less - but do it better. Having two fiscal events a year created a proliferation of tax measures precluding a more strategic approach to policy making and better, earlier consultation.

We welcome the Treasury issuing new details about the future Budget timetable, emphasising its commitment to one fiscal event a year. The Chancellor also echoed this commitment in his remarks to the Treasury Select Committee.

Sticking to this new timetable will reduce churn in the system, as the Treasury recognises. It also paves the way for improvements in other parts of the tax policy making process by taking a more strategic approach to policy and consulting more effectively.

A more strategic approach to tax

Our work identified a sense of ‘ad hocery’ in tax policy. The sheer number of new tax measures makes it difficult for those working across the system to discern a clear strategy in policy.

The new timetable - in which the Treasury expects policies announced in a future Budget will come into effect 16 months later - gives the Government the time and space for a more strategic approach.

The Government now has the opportunity to issue early calls for evidence at the Spring Statement to inform the development of measures that are then announced in the Autumn Budget, before consultation and inclusion in the subsequent year’s finance bill.

We emphasised how important calls for evidence are in allowing policy makers to fully understand an issue and open up a range of different options as they develop policy. That the Treasury sees the new timetable as an opportunity to do this is welcome, and their statement that early calls for evidence “allow open development of policy options” is an important step towards a more strategic approach to tax.

Improving consultation on tax policy

For government to understand who will be affected by proposed changes to tax measures, consultation is vital. It can also help to pick up any potential unintended consequences. 

A new approach to tax policy making was announced by the Coalition Government in 2010 which set out a five-step framework for how government would consult on changes to tax. This has been widely seen as a positive step, though with scope for improvement.

The Treasury has reaffirmed its commitment to this approach to consultation, but accepts that there is room for further progress and a new timetable makes this possible. A policy will be announced at the Autumn Budget, with policy consultation running through the winter and spring, before draft legislation is issued in July. That will undergo technical consultation before inclusion in the Finance Bill the following autumn.

The new timetable should also reduce the burden on organisations and tax professionals in responding to rafts of consultations. The proliferation of tax measures has often made this resource intensive, especially when there may be consultations ongoing at an international level.

One fiscal event should help government align domestic and international tax consultations. The Treasury also plans to reintroduce the online tax consultation tracker - something our three organisations called for - which allows everyone to see at which stage of the process the various consultations have reached.

An improved tax policy making process has many aspects: the quality of public debate about tax; parliamentary scrutiny; post-implementation review and the Treasury’s own internal processes.

But the move to one fiscal event a year, and the resulting timetable, is an important step in the right direction that offers real scope for further improvements. The first step will be to stick to this very welcome commitment. 

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