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George Osborne joined Lord Howe at the Institute of Chartered Accountants today to launch Howe’s report into tax simplification and scrutiny. Click here if you’d like to read it in full, although Labour’s Treasury ministers apparently felt able to dismiss it without doing so.

Howe’s working party – which included a former paymaster general, a former senior adviser in the Treasury, and a leading tax QC – was tasked with taking forward the Forsyth Commission’s recommendations on the making of tax law.

Reform is clearly needed, within the last year we have overtaken India as the country with the longest tax code in the world. Howe’s article in the FT today is worth reading. The report’s three key conclusions rare:

  • Establish an Office of Tax Simplification to examine the existing tax code and make proposals for simplification. The OTS would operate in a similar way to the National Audit Office and would be a powerful institutional pressure for simplification of the tax system.
  • Establish a new Joint Parliamentary Select Committee on Taxation in
    order to address the lack of sufficient parliamentary scrutiny of tax
    legislation.
  • Establish a convention that any changes to tax law with technical content should be proposed no later than the Pre-Budget Report before the Finance Bill in which they are to be included. This will help filter out badly thought through proposals produced with little consultation.

George Osborne said the "complex and unwieldy" Finance Bill for 2008 was a "sorry story of badly thought through proposals, complex initiatives and humiliating u-turns", and a case study in how not to make tax policy that showed the necessity of reform.

He praised the "excellent report" and announced that he would adopt the policies on creating an OTS and on announcing proposed tax changes earlier. He seemed to stop short of advocating the creation of a new Joint Parliamentary Select Committee however, by highlighting the existing work done by the Joint Committee on Tax Law Rewrite Bills and the Lords Economic Affairs Sub-Committee on the Finance Bill.

Osborne accompanied these endorsements with a call for "no more stealth taxes" in order to "restore trust in the tax system so that businesses and individuals can work, save and invest with confidence".

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