The reconstruction of the economy after the unprecedented economic fallout of the coronavirus crisis is an opportunity for the Committee to examine the tax system.
The Committee will look at what the major long-term pressures on the UK tax system are, what more the UK can do to protect its tax base from globalisation and technological change, and whether such pressures should be met with tax reform.
The Committee will also seek evidence on what overall level of taxation the economy can bear, the role of tax reliefs in rebuilding the economy, and whether there is a role for windfall taxes in the post-coronavirus world.
The Chartered Institute of Taxation (CIOT) is hosting a virtual launch event for the inquiry tomorrow, Friday 17 July. Details of how to register, watch and take part in the event are below.
Commenting on the launch of the inquiry, Rt Hon. Mel Stride MP, Chair of the Treasury Committee, said:
“The UK economy, like many economies around the world, has been placed under extraordinary stress due to coronavirus, with the worst of the economic fallout perhaps yet to come.
“Tax will play a major role in the years ahead in restoring the public finances and ensuring that we have a recovery which is balanced across the UK and fair to all.”
“So the Treasury Committee has launched this inquiry to examine how the Government should approach taxation after the coronavirus.”
Also commenting on the launch of the inquiry, Glyn Fullelove, President of CIOT, said:
“The UK economy faces enormous challenges in the aftermath of the Covid-19 pandemic.
“Whatever policies are adopted to meet the challenges ahead, being able to predict what the UK tax system will deliver under any given set of measures is vital for the Chancellor of the Exchequer. Exploring whether this is possible is a vital task.
“I am delighted the Treasury Committee has launched this inquiry into the weaknesses – and strengths – of the system as it stands.”
Notes to Editors
CIOT is hosting a virtual launch event for the Committee’s new inquiry on Friday 17 July at 11am-midday. Mr Stride, Mr Fullelove, Angela Eagle MP, a member of the Treasury Committee, and others will speak about the new inquiry, and attendees will have the opportunities to put their questions to the panel. If you would like to attend, please register on the CIOT website here.
The inquiry webpage, where evidence can be submitted, will be on the Committee website here when the embargo is lifted. The deadline to submit evidence is 5pm on Friday 28 August 2020.
The full terms of reference for the inquiry are as follows:
Terms of Reference
The coronavirus pandemic has had a major effect on the UK economy and public finances, and when the economy recovers from the crisis, debt levels will be significantly higher than they were before. The UK will need a strong tax base to maintain the level of public services at sustainable rates of borrowing. The crisis has also brought to the fore issues such as whether the Government’s economic response to the pandemic should be reflected in changes to taxation.
The UK tax system has been largely unchanged for many years, whereas the 1960s, 1970s and 1980s saw a number of radical and far reaching reforms. But even before the crisis there were a number of pressures building up in the tax system which had already led to calls for reform. For example, demographic shifts are changing the tax base and demands for public services, and the growth of online- and data-driven employment and business models are eroding traditional sources of taxation and raising questions about the future of the tax system. The reconstruction of the economy after the unprecedented economic fallout of the coronavirus pandemic is an opportunity to reflect upon and address these issues.
The Committee is seeking evidence on:
o What are the major long-term pressures on the tax system in the UK, including those arising from changes in working practices, demographics, the environment and other factors? How are these affecting the efficiency of the tax base and the overall level of demand for public services?
o What more can the UK do to protect its tax base from erosion as a result of globalisation and technological change, and what further impacts will the coronavirus pandemic have on our tax base?
o Do these pressures need to be met with tax reform, and if so, is this the right time for reform?
o What overall level of taxation can the economy bear without undesirable or counterproductive harm to economic growth?
o Which areas of the tax system are most in need of reform, and which are best left alone?
o What reforms should be considered in response to the pressures on the tax system?
o What is the role of tax reliefs in rebuilding the economy and promoting economic growth and efficiency? Does the current regime of tax reliefs perform this role well?
o What are the areas for simplification?
o Is there a role for windfall taxes in the post coronavirus world?
o What is the right balance between taxation of work, savings/pensions and wealth?
o What is the best way to tackle tax reform, including what changes might be needed at HMRC to support implementation, and how should the Government consult with stakeholders and parliament?
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