tiintax

Today the PCS – the Public and Commercial Services union – in HMRC – is on strike (or, as Sky news helpfully has it, “Jimmy Carr inspires thousands to walk out“)  The strike is in protest at cuts in HMRC staffing and to what they call “creeping privatisation” including two trials of using commercial services to replace HMRC call centre staff.  At the same time there is a lot of political noise about abolishing various benefits such as housing benefit for the under 25s.  The thinking around this is presumably that they can always go home to Mummy and Daddy, can’t they – an astonishing display of privileged thinking from the people who have never had an actual proper job in their lives.

Twitter, as ever, summed it up in 140 characters: ” Cutting housing benefit to under 25s might save you £2bn.  Well done.  Collecting the tax will save you £76 bn.  Happy to help.”

Only connect.

Meanwhile, here is the response I sent last week to the consultation on “possible changes to income tax rules on interest” – yes, I responded to all the ones that closed on Friday, I just didn’t have time to blog about it last week!  But there is a connection to today’s action, in that this is yet another consultation document that has a sloppy impact assessment that doesn’t make any compelling case for change, which is of course the point of doing the thing in the first place.  There’s an inbuilt cost to businesses and the rest of us in making any change to tax law at all – the cost of people having to learn about the changes and implement any changes to their own systems when they could otherwise be spending their time making widgets and earning profits.  So it’s one of the basic tenets of better regulation that you only make changes when the benefits justify the costs.

Is the current crop of consultations a bit woolly on the whole cost/benefit analysis side because they’re just going through the motions of consultation, or have they genuinely not got the resources any more to do the basic analysis work that ought to underpin any changes to legislation?

Anyone?

Possible changes to income tax rules on interest: consultation response

Dear Tony

This is an individual response to the consultation and will also be published over the next couple of days (with commentary) on my blog, http://tiintax.com.

I cannot see that the case is made for any changes to take place.  Although the impact assessment shows a 200m exchequer impact on the possible withdrawal of an exemption for intra-group Eurobonds, the remainder of the proposals are said to lead to “improved rules on the taxation of interest and interest-like returns” but what the “improvement” represents is not clear and there is no quantification of any impact on individuals, businesses or HMRC.  There is no cost/benefit analysis which would justify the change, and no compelling case for change is made elsewhere in the document.

It also seems to me that this is a consultation which would have benefited from a step back and look at the whole interest question in the round – the consultation is said to cover “the income tax rules on the taxation of interest and interest-like returns” but not to cover proposed “changes to the procedures for the collection of income tax deducted at source by companies, local authorities and individuals”.  Why not?  Wouldn’t it have been sensible to have looked at the taxation of interest – all interest – at once and made much more radical simplification?