6 Conclusion
84. Tax policies provide the framework for our tax
system. The tax raised by these policies taken together funds
the UK economy.
The Committee recommends that tax policy should be
measured by reference to the following principles. Tax policy
should:
1. be fair. We accept that not all commentators
will agree on the detail of what constitutes a fair tax, but a
tax system which is considered to be fundamentally unfair will
ultimately fail to command consent.
2. support growth and encourage competition.
3. provide certainty. In virtually all
circumstances the application of the tax rules should be certain.
It should not normally be necessary for anyone to resort to the
courts in order to resolve how the rules operate in relation to
his or her tax affairs. Certainty about tax requires
i. legal clarity: Tax legislation should
be based on statute and subject to proper democratic scrutiny
by Parliament.
ii. Simplicity: The tax rules should aim
to be simple, understandable and clear in their objectives.
iii. Targeting: It should be clear to
taxpayers whether or not they are liable for particular types
of charges to tax. When anti-avoidance legislation is passed,
due regard should be had to maintaining the simplicity and certainty
of the tax system.
4. provide stability. Changes to the underlying
rules should be kept to a minimum and policy shocks should both
be avoided. There should be a justifiable economic and/or social
basis for any change to the tax rules and this justification should
be made public and the underlying policy made clear.
5. The Committee also considers that it is important
that a person's tax liability should be easy to calculate and
straightforward and cheap to collect. To this end, tax policy
should be practicable.
6. The tax system as a whole must be coherent.
New provisions should complement the existing tax system, not
conflict with it.
85. No tax system is, or can be, static. There will
always be trade-offs and difficult decisions; a desire for fairness
may increase complexity; a desire for certainty may increase administrative
complexity. Nonetheless, the principles we set out, which reflect
a surprising degree of convergence within our evidence, give a
direction of travel which, in the long run, can both secure consent
and improve the performance of the economy.
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