The Treasury Committee has published the UK government’s response to the Committee’s report Tax after coronavirus, together with commentary on a number of points in the response. Key points from the response include the following:
The government agrees that continued support for business is vital in the near term, citing the extended loss carry back rules, the temporary capital allowance super-deduction and the various other support schemes including business rates reliefs and the VAT cut for the UK’s tourism and hospitality sector.
The government accepts the importance of public engagement in tax policy making and will continue to engage with Parliament, the tax profession and the general public and will look to improve the level of engagement where possible.
The government does not intend to ‘urgently reform the entire approach to pension tax relief’, but will consider responses to the 2020 call for evidence on pensions tax relief administration. This will include the government’s manifesto commitment to address the anomaly for low earners created by the different operation of ‘net pay’ and ‘relief at source’ arrangements.
Although a number of reforms to VAT and stamp taxes might appear attractive, the government is mindful of maintaining revenue from those taxes for the Exchequer, and any changes ‘would need to be considered very carefully’.
The Committee has expressed disappointment that some of its recommendations, particularly around strategy, have been dismissed ‘without a full explanation’:
The Committee disputes the financial secretary’s statement that the balance of recommendations in the report ‘leans away from measures that would help to repair the public finances in the coming years’. The Committee notes: ‘We identified measures – which the government adopted – for raising many billions in additional revenue. We also evaluated a wealth tax and an excess profits tax, both of which have been proposed as ways of paying for the fiscal costs of the pandemic.’
The Committee has asked the government to provide a more detailed explanation of why it has rejected recommendations on the need for a tax strategy.
The Treasury Committee has published the UK government’s response to the Committee’s report Tax after coronavirus, together with commentary on a number of points in the response. Key points from the response include the following:
The government agrees that continued support for business is vital in the near term, citing the extended loss carry back rules, the temporary capital allowance super-deduction and the various other support schemes including business rates reliefs and the VAT cut for the UK’s tourism and hospitality sector.
The government accepts the importance of public engagement in tax policy making and will continue to engage with Parliament, the tax profession and the general public and will look to improve the level of engagement where possible.
The government does not intend to ‘urgently reform the entire approach to pension tax relief’, but will consider responses to the 2020 call for evidence on pensions tax relief administration. This will include the government’s manifesto commitment to address the anomaly for low earners created by the different operation of ‘net pay’ and ‘relief at source’ arrangements.
Although a number of reforms to VAT and stamp taxes might appear attractive, the government is mindful of maintaining revenue from those taxes for the Exchequer, and any changes ‘would need to be considered very carefully’.
The Committee has expressed disappointment that some of its recommendations, particularly around strategy, have been dismissed ‘without a full explanation’:
The Committee disputes the financial secretary’s statement that the balance of recommendations in the report ‘leans away from measures that would help to repair the public finances in the coming years’. The Committee notes: ‘We identified measures – which the government adopted – for raising many billions in additional revenue. We also evaluated a wealth tax and an excess profits tax, both of which have been proposed as ways of paying for the fiscal costs of the pandemic.’
The Committee has asked the government to provide a more detailed explanation of why it has rejected recommendations on the need for a tax strategy.
