Most chancellors love Budget surprises. But, argues Stella Amiss, Head of Tax Policy, Regulation and Reputation at PwC, the challenge of designing a tax system for post-Brexit Britain makes this a good time to engage the public properly on tax choices.
“I won’t make significant changes twice a year for the sake of it”, the Chancellor said in November. It certainly seems unlikely we’ll see many tax measures in tomorrow’s Spring Budget. If changes are coming, they’re more likely to be in the Autumn Budget – the big fiscal event of 2017.
But that doesn’t mean we won’t hear much on tax this week. With Brexit negotiations around the corner, it’s unlikely the Chancellor will miss an opportunity to indicate how a future UK tax system could look.
Whether, for instance, tax competition will crank up, as many interpreted Philip Hammond’s January interview with German newspaper Welt am Sonntag. Tax could also play a key role in delivering the Government’s industrial strategy – such as supporting companies to scale up (for example by tax incentives) and driving growth across the whole country (potentially further devolving tax powers).
Let’s hope we get more than hints. What we really need is for the Chancellor to set out a potential path for future tax policy – as the Institute for Government, Chartered Institute of Taxation and the Institute for Fiscal Studies recommended in their Better Budgets report. With Brexit arguably creating a key opportunity to revamp the tax system, now is the time for proper consultation on the different potential approaches.
And with so much at stake, this consultation needs to extend beyond the political, business and professional community, to the public too. Easier said than done? As part of PwC’s Paying for Tomorrow programme on the future of tax, we’ve seen first-hand how public engagement on tax can work.
Our citizens’ juries, run with research organisation Britain Thinks, gives the lie to the notion that tax is too complicated for people to understand or that they have no desire to do so. Given the time, space and information, people not only get to grips with the conundrums at the heart of tax policy, but can come up with interesting solutions.
The format brings together a broadly representative cross section of the public. They hear from a wide range of ‘expert witnesses’ – often with opposing views – before deliberating issues in small groups.
What’s striking is the way individuals’ views shift over the course of the sessions. Also, the way they put aside self-interest when they hear how their fellow citizens’ will fare from a particular measure. For instance, one Jury called for inheritance tax to be abolished – even though hardly any of the jurors would be caught by the tax. They just decided the tax was unfair, in their words a form of double taxation.
Perhaps most surprising was the overall level of engagement. The idea of spending time talking tax might sound a hard sell – but we struggled to get people to leave!
Clearly Citizens’ Juries are just one model of public engagement. I do think face-to-face discussion and debate is ideal, but these could be supplemented with digital forums and debate. There are probably all manner of approaches: now is the time for some creative thinking. PwC has held similar juries for business too, bringing together a diverse mix from start-ups to multinationals, and across a range of sectors.
In the meantime, if in the Budget the Chancellor publishes road maps for potential tax reform, they will hopefully trigger some level of debate on what could make a huge difference to future prosperity nationwide.
Stella Amiss is Head of Tax Policy, Regulation and Reputation at PwC. Her comments represent personal opinion rather than the views of the Institute for Government.