MPs slam government over Budget retrospective tax
More on Economic Indicators
- Yen climbs higher after BoJ announcement
- Government data confirms falling UK house prices
- Japan and US hold monetary policy steady
In focus: Budget 2012
The Treasury Select Committee has today (18 April) published a report on Budget 2012 recommending the government clarify what retrospection is proposed with regard to stamp duty and that it restrict its use of retrospective legislation to wholly exceptional circumstances.
HM Treasury was told the MPs committee should set these proposals out as soon as possible for consultation.
Andrew Tyrie MP, chairman of the Treasury select committee, said: “Retrospective tax legislation conflicts with the principles of tax policy recommended by this Committee and with those laid down by the chancellor.
“We therefore have serious reservations about retrospection in the tax system.”
The 92-page report also revealed a new committee inquiry will be launched into macroprudential tools and the Bank of England and HM Treasury have been to explain impact of quantitative easing on pensioners.
Reflecting on a Budget that had few surprises, the committee stated the nature of a coalition government was no justification for leaks.
According to the committee, appropriate pre-Budget consultation on specific measures, especially in the tax field, is to be welcomed.
The MPs also recognised that it is possible that there may also be cases where HM Treasury judged it necessary to canvass views about a measure intended for the Budget that has not been put out for consultation.
However, the committee ruled information about such measures should be publicly released by HM Treasury in the normal way and, as appropriate, accompanied by a written or oral parliamentary statement.
The report stated: “Coalition government is not a justification for Budget leaks. We recommend that the government review its practices, based on the experience of this Budget, for preserving Budget confidentiality in a coalition context.”
The report also called into question 45p tax and the shake-up of child benefits. The costs and benefits of reducing the additional tax rate to 45p are both highly uncertain, the report stated, and could be significantly more or less than the cost included in the Budget.
HMRC was told to publish, in due course, a comprehensive assessment of the effect on the Exchequer of the new 45p rate.
The committee also stated the Government’s latest proposals for reform of child benefit solved only one of the two main problems identified with its original policy and added further complexity.
The report stated: “We will review the effect of the changes on HMRC, where further staff reductions are being implemented, in our regular hearings with it.”