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Tory pledge tax 'early warnings' Tory pledge tax 'early warnings'
(about 4 hours later)
Major tax changes should be unveiled six months before the Budget and be more heavily scrutinised, the Conservatives say in a report.Major tax changes should be unveiled six months before the Budget and be more heavily scrutinised, the Conservatives say in a report.
Ideas to simplify the system and end "stealth taxes" have been drawn up by ex-chancellor Lord Howe. Ideas to simplify the system and end "stealth taxes" have been drawn up by former chancellor Lord Howe.
The proposals are not official party policy, but shadow chancellor George Osborne is expected to back them later. Shadow chancellor George Osborne said they would "restore trust" in taxes.
Lord Howe told the BBC the delay would avoid problems such as those created by the "10% tax rate debacle". He said publishing ideas early would avoid problems like those on capital gains reforms but the Treasury said it would prevent "emergency changes".
The 10p tax rate was abolished by Gordon Brown last year in his final Budget as chancellor, in an unexpected announcement at the end of his speech. Under a Conservative government, any complex changes would be announced no later than the autumn pre-Budget report - allowing them to be scrutinised by experts and businesses before the Budget.
At the same time, he unveiled a cut in the basic rate of income tax from 22p to 20p. 'Invest with confidence'
'A mess' Mr Osborne said: "Future governments will no longer be able to bury the bad news in the small print."
But the move backfired when it came into effect as millions of low paid workers were left out of pocket, sparking a backbench Labour rebellion and a government U-turn. He backed the report's calls for a cross-party committee of MPs and peers to be set up specifically to examine tax policy and for a new Office of Tax Simplification, made up of Treasury officials, academics and others charged with making the system more straightforward.
Last week a report on the abolition of the 10p rate - and the £2.7bn package brought in to compensate many of those who lost out - raised doubts about the "perceived benefit of seeming to pull rabbits from the hat" at Budget time.
FROM THE TODAY PROGRAMME Cameron's Britain: Tax and spendFROM THE TODAY PROGRAMME Cameron's Britain: Tax and spend
Lord Howe told BBC Radio 4's Today programme: " A lot of changes being introduced at the last minute with short notice and then turning out to be a mess." "At a time of deep economic difficulty, the last thing the Treasury should be doing is creating yet more uncertainty and instability," Mr Osborne said.
He added: "What we are proposing is that any significant tax change that is proposed should be produced in a form that Parliament can examine at the time of the pre-Budget report, that's six months before the Finance Bill actually reaches the House." "With these proposals a future Conservative government will restore trust in the tax system so that businesses and individuals can work, save and invest with confidence."
His report calls for a cross-party committee of MPs and peers to be set up specifically to examine tax policy, which he said was currently "under-scrutinised". He said arguments over the government's proposals to change capital gains tax and "non-domiciled" foreigners showed the need to make announcements early.
Small print 'Pretty dangerous'
It would also examine proposals from a new Office of Tax Simplification, charged with coming up with ways of simplifying the whole system. But Treasury minister Kitty Ussher said the proposals were "absurd", adding: "They would prevent your ability to make emergency changes in a Budget - for example, if you discovered a tax-avoidance scam...That would be pretty dangerous."
Lord Howe said tax had become much more complicated under Labour and he said the Tories would end "stealth taxes" - an example of which, he said, was Mr Brown's "raid on pension funds" in the 1990s. Earlier Lord Howe told BBC Radio 4's Today programme: "What we have seen over the last 10 years has been a doubling in the number of pages of tax law, a lot of changes being introduced at the last minute with short notice and then turning out to be a mess - the 10p tax rate debacle is a very good example.
"We simply cannot go on multiplying the tax law on our statute book, we have got to begin clearing the undergrowth," he said. "We simply can't go on multiplying the tax law on our statute book. We have got to begin clearing the undergrowth. That's going to be a long business -that's why it is important to set up institutions to carry it through."
Shadow chancellor George Osborne said the Tories would make taxes "simpler and more transparent". The 10p tax rate was abolished by Gordon Brown last year in his final Budget as chancellor.
"With these changes suggested by the former Chancellor of the Exchequer, Geoffrey Howe, there will be no more stealth taxes," said Mr Osborne. It coincided with a cut in the basic rate of income tax from 22p to 20p, revealed in an unexpected announcement at the end of Mr Brown's speech.
"Future governments will no longer be able to bury the bad news in the small print." But the move backfired when it came into effect as millions of low paid workers were left out of pocket, prompting a backbench Labour rebellion and a government U-turn.
Last week a report on the abolition of the 10p rate - and the £2.7bn package brought in to compensate many of those who lost out - raised doubts about the "perceived benefit of seeming to pull rabbits from the hat" at Budget time.
The ideas are not official policy yet, but give a clear indication of what may feature in a future Conservative election manifesto.The ideas are not official policy yet, but give a clear indication of what may feature in a future Conservative election manifesto.