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The strange death of Budget purdah

Coalition government has changed many of the internal workings of the Whitehall machine. Making clear that the world does not fall apart when leading political figures debate tax choices would be a valuable legacy.

Mansion tax anyone? Tycoon tax? 50p rate maintained? An end to higher rate relief on pensions? Hiking tax thresholds – boon to the poor or regressive move? Or cutting corporation tax to 20 per cent? The Budget starter list (the usual starting point for the budget process listing all the options potentially on the table) normally carries a Treasury SECRET classification. This time, it is all over the press cuttings. And no one needs to be calling in the police for a leak enquiry. At this time of year, after months of silence, the norm is for the discreet trails to be laid of some of the key themes of the budget. A few second order announcements which will be crowded out on budget day are let loose in advance to make sure they get their day in the sun. This year is very different. Phase two of the Coalition, after the AV referendum, has seen a move to differentiate on the part of the Lib Dems. With no money to been spent, tax has become a key battleground. On budget day only one person can get the credit for the showstopper at the end – so the debate is being waged in advance and very, very publicly. This gives the lie to the notion that tax policy is in some way special and needs to be made under conditions of extreme secrecy. There are real choices to be made and it is good to have a debate on whether housing or wealth is relatively undertaxed compared to income; whether the 50p rate yields additional revenue or stifles wealth creation; whether it is better to go after tax relief for higher earners or deny them child benefit; whether a tycoon tax (rather more prosaically a minimum tax) would actually work in stopping people exploiting legal tax reliefs more effectively than we intended. There are a whole range of interesting and important choices to be made. But rather than simply allow people to act as spectators, as the Coalition heavyweights slug it out, waiting to see whether the Lib Dems can point out the yellow bits among the sea of blue and red on budget day, why not open up the discussion. As we have argued before, we need a better public debate on tax options. The Chancellor took office with a clear commitment to improve the way tax policy is made – as the Treasury said in December 2010, responding to the consultation on its initial proposals: “the Government’s aim is to reduce the volume and frequency of changes to the tax code and provide greater predictability and transparency in our plans for tax reform.” So let us hope the Coalition quarrel ends up with neither a victory nor a messy compromise, but with a commitment to a Green Paper with scope proper consultation or a review on the future of taxation to open up the strategic choices not just for the next month or so, but for the coming years. Everyone – Lib Dem, Conservative, Labour, other and non-aligned - would then be a potential winner from making tax policy better.

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