Financial Secretary: "a tax system that works for individuals and businesses alike is steady, measured and consultative"
Jane Ellison's remarks on tax policy making following a report by the Chartered Institute of Taxation, the Institute for Fiscal Studies and the Institute for Government.
Thank you for having me 鈥� it鈥檚 a pleasure to be here today to join in the discussions about this important report.
It鈥檚 been put together by some of the leading voices in our tax community.
And given that I share the same aim as the report 鈥� to make our tax policy better 鈥� it鈥檚 clearly something that deserves detailed consideration.
So that鈥檚 exactly what I鈥檝e done.
And I鈥檝e found that actually it鈥檚 not just the aim of the report I share, but many of the views it contains as well.
So I鈥檝e picked out 4 of the key themes it raises which I think really go to the heart of what you need for sensible tax policy.
In short 鈥� you need stability, direction, professionalism, and teamwork.
Stability
I鈥檒l take each of those in turn and start with something I think is absolutely fundamental 鈥� and that鈥檚 stability.
Because tax policy shouldn鈥檛 be about trying to grab headlines with sweeping reforms.
As you might imagine, I heard a lot of representations from various businesses, tax professionals and organisations in the run up to the Autumn Statement.
And people weren鈥檛 asking us to ring the changes鈥�
Quite the opposite.
The most common ask of us was that we maintain a steady, predictable tax regime that people could plan around.
They wanted sensible, workmanlike adjustments that provide certainty 鈥� or indeed no change at all if that鈥檚 the wisest course.
And that鈥檚 the style this government wants to adopt.
We want to take a steady, measured approach 鈥� precisely what I hope you鈥檒l have seen from us at the Autumn Statement.
In fact, the biggest change we made then was a reflection of that kind of approach 鈥� which was to abolish the Autumn Statement itself!
Single fiscal event
We listened to those of you who told us it was time to move away from the system we鈥檝e had in this country for decades now鈥�
One where we hold a Budget in the spring, and then effectively another one in the autumn 鈥� each one making a raft of new changes to the tax system.
In fact, it was an early recommendation from the project behind this report today that we did away with the Autumn Statement 鈥� and I want to thank CIOT, the IFS and the IfG for sharing their advice on this from an early stage.
It was advice we fully agreed with.
Holding two major fiscal events every single year as a matter of course is something which no other major economy does鈥�
It makes life difficult for the businesses and individuals who need to adapt to all the changes鈥�
And it can get in the way of effective consultation and the smooth implementation of new policies.
2017 will be the last year where we take this this approach 鈥� with a spring and autumn Budget.
From 2018, there will be just one major fiscal event a year, when the Budget is presented in the autumn.
In the spring, we will give a statement in response to the OBR鈥檚 forecast 鈥� in line with our legislative commitment to present two such forecasts to Parliament each year.
We may also highlight longer-term fiscal issues, or launch consultations.
And there would be the opportunity to make changes if there were a compelling reason to do so.
As we move into a period of inevitable uncertainty, it is appropriate to reserve this right 鈥� particularly as we enter negotiations to leave the EU, during which we may be forced to act.
But ultimately, having one major fiscal event each year means we can be much more strategic and considered in our approach.
We can raise issues we want to consider in the Spring Statement鈥�
Then set out specific proposals at Budget鈥�
Consult on them widely鈥�
And the following year, we can publish draft legislation and introduce the Finance Bill 鈥� with most legislation enacted around the start of the new tax year.
That鈥檚 an approach that I know makes much more sense to most of the tax community 鈥� and I鈥檓 pleased that we鈥檙e now making that change happen.
Direction
So stability is without a doubt a real cornerstone of good tax policy.
But linked to that is the need to provide clear direction.
This report places a really strong emphasis on the value of telling people in advance when and how we are going to change tax policy in the future.
This way, they know what鈥檚 coming and have the confidence to make decisions on the back of that. And that鈥檚 an approach we strongly support.
Early in the last Parliament, for example, George Osborne outlined a corporate tax roadmap to provide businesses with greater certainty in the longer term.
And last year we took that further when we set out the business tax roadmap to 2020.
This covered a range of business taxes 鈥� including corporation tax, business rates and energy taxation.
As you鈥檒l have seen at Autumn Statement, we鈥檙e sticking by it.
But there are further ways in which we can set the direction too.
To take an example, regardless of what you think about the recent changes we made on salary sacrifice, what I hope you will recognise is that it was helpful that we signalled our intentions in advance.
We said at the Budget in March that we saw this as an area of tax that we would need to address鈥�
We considered how we could do so, consulted on the issue over the summer, and then laid out our intentions in the Autumn Statement 鈥� having taken the views we received into account.
A more recent example of this approach was how we signalled at the Autumn Statement our belief in the need to consider how we can ensure that taxation is fair between people with different ways of working 鈥� from employees to self-employed to incorporation.
By setting out that this is something we鈥檒l be looking at, we are getting the debate started early鈥�
Because taking views from across the tax profession now will put us into a much better position to analyse the issues.
So I鈥檓 in full agreement with the report on the enormous value of being clear and open about the direction of travel 鈥� both for the sake of those making plans on the basis of our policies, and for the sake of developing better policies in the first place.
Professionalism
Another area that the report rightly focuses on is making sure we have the expertise we need within government to run a highly professional service.
Let me take this opportunity to pay tribute to the efforts and professionalism of HMRC staff nationwide throughout both their work on the ground and in supporting ministers to deliver sound policy.
And it鈥檚 precisely that professionalism that we鈥檙e working to develop further, both in the Treasury and in HMRC.
For example, for the first time in the Treasury we鈥檙e offering full sponsorship for our staff to gain the professional tax qualifications that I know will be familiar to many of you here today鈥�
Whether that鈥檚 to become a Chartered Tax Adviser, or to take the Association of Tax Technicians exams.
We see real value in boosting our technical capacity and I鈥檓 pleased to say that our first cohort of staff will begin this training next month.
Alongside that, we also have some great internal training 鈥� for instance with our Tax Policy School.
And we鈥檒l keep exploring what more we can do to support the talented staff we have at both the Treasury and at HMRC.
Because we want to make sure we help them develop the skills and expertise to rise up the ranks and lead forward tax policy development in the future.
Teamwork
But it鈥檚 not just about building up the expertise we have in the Treasury 鈥� and in HMRC 鈥� to run a highly professional and skilled operation.
It鈥檚 about tapping into the expertise beyond government too.
Because, critically, we want a responsive tax system.
One that looks at the problems, listens to what people have to say, [even those who are always looking for a relief or exemption!], and makes sensible changes as a result.
And I think that鈥檚 another focus of the report that really matters.
This is a team effort and we can improve our tax system enormously by drawing on the knowledge people have across the tax community鈥�
From practitioners to parliamentarians, academics, businesses and representative groups鈥�
And I should add to that list the Office for Tax Simplification too.
Because this is a body which has already contributed a considerable amount to making our tax policies better.
They have made hundreds of recommendations to reduce the complexity of our tax system 鈥� and we in turn have implemented a lot of changes in response, such as simplifying employee benefits and expenses.
That change alone has saved employers an estimated 拢20 million per year in administrative costs.
And with just one fiscal event per year, there will no longer be multiple moments at which we ask businesses to make administrative changes or adapt to new policies鈥�
Indeed, as I have heard directly from businesses in recent weeks and months, the value of ringing in the changes is often 鈥榯rumped鈥� by the virtue of restraint.
But to return to the broader point, what I think we have to recognise is that, for taxation policy to really be well developed, it requires a genuinely collaborative group effort.
And I see it as the job of the government to enable that kind of team approach.
That means opening ideas up for debate鈥�
Seeking views from across the spectrum鈥�
Listening to concerns鈥�
And welcoming scrutiny.
All of which help to build public confidence in our tax system.
That鈥檚 certainly what I鈥檓 working to ensure we are doing.
And I have no doubt that any tax policies we introduce following that approach will be all the better for it.
Implementation
So I鈥檝e talked about some of the four most essential priorities for better policy making: providing stability, signalling your direction, enhancing your expertise and drawing more on the expertise of others.
But I want to say a quick word about the other side of the policy-making coin: implementation.
Because to have the most effective tax system we can, we need to make progress on both fronts.
And I think there鈥檚 a huge amount of potential to bring the tax system into line with what taxpayers now expect from other service providers: a modern digital experience.
And we鈥檙e investing a lot in making that change happen.
But more generally, alongside that, HMRC are ambitious about delivering excellence in customer service.
Both the government and HMRC know that it hasn鈥檛 always been good enough.
But that makes us all the more determined to set our sights high and step up our efforts to deliver a service that is improving all the time. Indeed, it鈥檚 important to recognise that it has in fact done so in recent months鈥�
And I鈥檓 ambitious about increasing the transparency around HMRC鈥檚 performance in the future.
So in summary, this report captures some of the fundamentals that any government needs to get right for effective tax policy making.
And what really helps establish a tax system that works for individuals and businesses alike, is a steady, measured and consultative approach that gives people both the time and confidence to plan ahead.
The government has listened, and I can assure you that we will continue to listen.
Thank you very much.