Treasury Committee launches ‘Tax after coronavirus’ inquiry

The Treasury Committee is launching a new inquiry called ‘Tax after coronavirus’ to look into the long-term pressures on the UK tax system.

Reconstructing the economy in the aftermath of the economic fallout of coronavirus is an “opportunity” for the Committee to examine the tax system, the Government has stated.

The Committee indicated it will consider what the UK can do to protect its tax base from globalisation and technological change, and whether such pressures should be met with tax reform.

The Chartered Institute of Taxation (CIOT) is hosting a virtual launch event for the inquiry today.

Chair of the Treasury Committee, Mel Stride, said: “The UK economy, like many economies around the world, has been placed under extraordinary stress due to coronavirus, with the worst of the economic fallout perhaps yet to come.

“Tax will play a major role in the years ahead in restoring the public finances and ensuring that we have a recovery which is balanced across the UK and fair to all.”

Responding to the inquiry’s launch, Quilter tax and financial planning expert, Rachael Griffin, commented: “So far throughout the pandemic, we have been witnessing the Chancellor’s good cop routine as he announces wave after wave of unprecedented fiscal support. But come the Autumn, the good cop will give way to reality cop and the Chancellor will be forced to reel in the spending and increase tax to ensure the sustainability of the public finances.”
 
Griffin also suggested Rishi Sunak is facing an “unenviable challenge” to balance the economy and public spending while raising sufficient tax revenues.

“This is difficult enough during periods of stability, but it becomes a particularly thorny nettle when demand slumps, public debt widens, and there is expectation from voters that the country spends more on key public services,” she added.
 
“That complex challenge explains why political commentators are proposing a wide range of potentially radical reforms, from one-off wealth taxes to scrapping key reliefs on pensions and investments.

“Complete overhauls of the tax system are unlikely in the Autumn given the practical implementation challenges and the distortions it could generate, but tweaks and changes are inevitable.”

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