Where indeed? While I have no wish to recite statistics, it seems agreed that a conservative estimate of the overall public finance cost of COVID-19 in the UK is £300 billion, according to the Office for Budget Responsibility (OBR).
Latest reports show that the UK borrowed £128 billion in the quarter to June, while the deficit of tax receipts over public spending between April and June was £174 billion, compared to £20.3 billion for the same period for 2019-20 and far greater than the previous quarterly record of £76.8 billion in the fourth quarter of 2009, the height of the last crisis. Unsurprisingly, Rishi Sunak stated on 21 July that “I am also clear that, over the medium term, we must, and we will, put our public finances back on a sustainable footing”.
Sophie Dworetzsky, Charles Russell Speechlys
Alongside this there are a number of active tax reviews, notably the Office of Tax Simplification (OTS) last week launched a call for evidence to seek views about capital gains tax (CGT), focusing on both the principles underlying the tax, and views on the technical and operational aspects of CGT.
In addition, the Treasury Committee, appointed by the House of Commons to examine the expenditure, administration and policy of the Treasury and HMRC as well as certain associated public bodies, has launched the ‘Tax after coronavirus’ inquiry. This arguably heralds a dramatic review of much of the UK’s tax structure, in the context of how the UK can best protect its tax base against the twin pressures of globalisation and technological change.
Also, the Institute for Fiscal Studies (IFS) launched an enquiry into the possible introduction of a wealth tax earlier this month, with a final report expected in December.
Inevitably, given the state of public finances, there is and will be a focus on revenue raising, and of course tax will play an important part in this. There are well known and, in my view, correct, arguments that simply raising taxes does not automatically mean an increase in the public coffers, and let us hope that the Chancellor agrees. Of more immediate relevance though, what changes might be coming and what should be done in anticipation of/preparation for those changes?
Would a map help?
The first point is that given the number of simultaneous reviews afoot, it is very much to be hoped that they don’t simply operate on parallel lines, but that the findings are looked at as a whole, as reform of CGT in isolation is irrational if one, for example, then imposes a wealth tax or drastically reforms inheritance tax. Which emphasises the need for a tax policy roadmap, as was somewhat suggested in the 2011 Mirrlees review and adopted...