Feature, not a bug

April 17, 2012

I am very impatient with U-turn stories in the press.  Changing your mind when something doesn’t work shouldn’t be thought of as a weakness but a strength – like the quote from Einstein about insanity consisting of doing the same thing over and over and expecting different results.  So I was very impatient yesterday with the stories about the cap on tax relief for charities being “watered down” and that a consultation had been newly announced.  People, consultation on tax changes isn’t a bug, it’s a feature!

It all happened in June 2010, with the publication of a document called Tax Policy Making: A New Approach.  It said that the government was going to move away from a system of announcing something in the Budget in March and then immediately enacting it in the Finance Bill in April.  Instead, the government committed itself to a new schedule, where something is

  • announced in the Budget in year one
  • There’s a public consultation over the summer
  • The resulting legislation is published in draft in the Autumn
  • A TIIN – a tax information and impact note – is published with the draft legislation, explaining how much it will cost and what its impact will be
  • The draft legislation is then open for consultation over the winter, to check that it works as intended, and finally
  • The revised draft legislation goes into the Finance Bill in year 2 (or even year 3, for particularly long and complicated measures that need more than one consultation)

They even set up a forum of tax professionals to advise and comment on how well the proposals were implemented, and the forum reported at the end of last year that it was all going pretty well.

So announcing a cap on claims to tax relief, including relief for gifts to charity, was entirely appropriate for the Budget.  And then running a consultation to find out how to do that without unintended consequences (like screwing the charities sector, for example) was the expected next step.  It’s not a climb down, u-turn or response to pressure.  It’s how the system works.

The government “consults” incessantly.  Luckily, no-one much ever responds except for the “usual suspects” – the pressure groups, professional associations and representative bodies who have staff used to how this stuff works and who know where to start.

But there’s nothing to stop anyone – anyone at all – from responding to a government consultation.  Start here to find what they’re asking about.  The Treasury helpfully provides a Tax Consultation Tracker which I see was last updated on 13th April – before all the “u-turn” stories.  The formal consultation on the “cap on unlimited tax reliefs” is scheduled for the summer.  See?  No U turn.  A scheduled consultation.  A feature, not a bug.

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