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Lessons in lobbying for tax change

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18th Nov 2015
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The CIOT and Institute of Fiscal Studies debate on The Politics of Tax Change, suggested ways to get HMRC to listen to tax proposals, as Rebecca Cave reports.

The three panellists at the debate had all worked inside HM Treasury as policy advisers or senior civil servant, so were well placed to inform the audience about the machinery that makes tax policy and how interest groups can influence policy decisions.

Stewart Wood is a former senior special adviser to Gordon Brown; he has three strong tips for lobbying the Treasury

Special interests 

Don’t plead special interests for a particular industry sector. The Treasury view is that if the sector needs support then it should have a subsidy. If the sector is doing well it doesn’t need tax relief, or if it is not doing well then it needs to generate greater efficiency. Tax reliefs will not help.   

Long term benefits

The Treasury looks kindly on tax proposals which will create long-term savings or simplicity, or restore coherence to system which has developed a problem, or has a strong economic argument.

Know your Chancellor  

What are the Chancellor’s favourite themes? Where has he been burnt in the past and is unlikely to revisit (hot pasties). Work out the Chancellor’s need to balance looking tough and his desire to support certain causes. In short be a criminologist when approaching the Chancellor, but be straight forward when presenting to the Treasury.

Rupert Harrison is a former chief of staff to George Osborne; his tips for presenting a new tax policy are similar:

What the politicians say  

Pay close attention to what the Chancellor and other Government minsters say in terms of goals and general direction of travel. Suggestions which are contrary to speeches made by Government ministers will not be given the time of day. 

Winners and losers

Think about who the winners and losers from a change in policy will be. The worse combination is a defuse set of winners and concentrated set of losers. If the losers are a political priority for the Government the policy change won’t happen.

Costs 

Estimate the costs and likely revenues connected with the policy proposal. Expensive proposals that don’t deliver any immediate increase in revenue are unlikely to be considered.

Coordination 

Make a co-ordinated and coherent approach from several industry groups to present ideas for reforms that cover a common theme. A reasoned and costed argument is likely to be given more serious consideration inside the Treasury than random moans. 

Jill Rutter is a former Treasury senior civil servant. Jill explained how the Treasury is allowed to get away with making tax policy in ways which would be impossible for other Government departments. The Treasury is not required to comply with the norms of government policy making, which would generally involve:

Discussion 

There is no collective discussion of proposed policies outside the Treasury. Policy announcements can come as a complete surprise to other departments which may be working on the same issue from a different direction.

Scrutiny 

There is Treasury scrutiny on policy proposals, but it is very different from that which occurs in other departments on spending proposals. If the tax reliefs were recast as spending commitments, many would not see the light of day. For example by 2019/20 the cost of the Help to Buy ISA is expected to be £835m, which would be very difficult to pitch as a spending proposal.

Exemption from regulation

The Treasury is exempt from various disciplines relating to regulations such as the “one in two out” rule for new regulations (see Better regulation framework manual). Initiatives such as the red-tape challenge do not apply to tax or national security. Also the Office of Tax Simplification is only allowed to look backwards at tax rules already made, not at tax policy proposals.   

Prevent mistakes 

Questions from the floor focused on how tax policy mistakes could be avoided, such as the zero rate of corporation tax. The answers varied from; some policies were trial and error to; the mismatch in timing between costs and benefits for individuals perhaps was not appreciated in advance. The conclusion was that more consultation about tax policy would be beneficial. What changes in tax policy would you like to see the Treasury consider?

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