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Tax Take

I dislike the term “Budget giveaways” when used to refer to tax cuts. Allowing someone to keep their own money is not, and never can be, a “giveaway” – unlike Labour’s preferred practice of giving some the money of other people.

But whichever practice you favour – cutting taxes or hiking spending – it’s pretty clear that the Chancellor has very limited opportunities for either, faced as he is with a stubbornly large deficit and stubborn coalition partners. As Osborne put it on Sunday, there will be “no giveaways, no gimmicks”.

So he has been searching for other ways to make people’s lives easier and to win votes with his Budget that don’t involve breaching his own targets or Gordon Brown-style sleight of hand, where instant nice news turns out to conceal nasty details that emerge over the hours after the speech ends. The pressure is on him like never before – while the Conservative message is not that the hard times are over, it is that we are starting to see the benefits of all that hard work. Voters understandably want to see him share the proceeds of austerity, and he expects they will be judging whether he has done so satisfactorily in a few weeks. (Peter Hoskin studied whether the Budget would indeed decide the election here, yesterday.)

That is the genesis of this morning’s leaked announcement (after an unusually sparse series of leaks for a Budget week) that the end of year tax return will be scrapped. Millions know the frustration (and sometimes panic) of filing complex forms to a strict deadline – and the attendant threat that if your mind is boggled by the complexity of the system then you may have to pay a fine for missing the cut-off.

Abolishing that system in favour of a more accessible, more easily understood and less hectic digital return makes sense and the removal of one bit of torture from our lives will be welcome. The Treasury’s logic will also be that a process which makes it easier to pay and calculate your taxes will save money in advice and raise the rates of prompt payment.

In a way, it’s an echo of the Osborne who was once a proponent of flat taxes. The overall idea may be too radical or too risky for him nowadays, given the other challenges on his agenda, but it seems that if he can’t or won’t flatten tax he will at least try to flatten the way it is collected. The benefits of both systems in ease of use, ease of administration and ease of collection are all similar, if on drastically different scales. It’s also an approach typical to the Coalition’s philosophy of public sector reform – just as in addressing troubled families or reforming welfare, the idea is that it’s morally preferable and fiscally more effective to change the system in a way that helps to solve a costly and damaging problem than it is to simply try to force down the costs of the symptoms.

Plus, reforming systems is good politics for a Chancellor who doesn’t have much wriggle room to drastically reduce the bill those systems hand to you. If you can’t hammer the taxes people dislike, then at least hammer the chaotic, frenetic and opaque taxman they dislike for collecting them.

31 comments for: Death of a taxman

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