The first and best thing George Osborne could do is start all over again. Of course he won’t and this week’s budget will be another missed opportunity. But each year that passes without real reform is another year wasted.
Britain’s current tax code is the product of a century of bodging. Each year the Chancellor promises to ‘simplify’ the system only to reward chosen groups with allowances for this and relief for that and lord knows what else. Other, less favoured, petitioners are punished to compensate for the trinkets dished out to this year’s chosen interests. The new simplicity turns out to be as much a warren as the old complexity.
So another year of bodging. The system is rickety and contradictory and no longer, as they say, ‘fit for purpose’. Dismantling it and beginning again would not be an act of fiscal barbarism but, on the contrary, an opportunity to write from scratch a tax code that was sensible, equitable and, even, comprehensible.
Fortunately, the Chancellor need not start from scratch. A plan already exists. The Mirrlees Report commissioned by the Institute for Fiscal Studies provides a framework for a better way. As starting points go, it is a good one.
Implementing the Mirrlees Report – or something like it – would ensure Osborne’s legacy as a great reforming Chancellor. Less importantly (sic) it would also be in the national interest. Even more so if he secured Ed Balls’s agreement that if elected next year Labour would continue the multi-year work of demolishing the existing tax code and building a new, better, replacement.
‘Everyone’ knows the current system is broken. No amount of bodging can fix or make sense of it. Blow it up and start again, George. Your place in history awaits.