Ten Tenets for a Better Tax System
The Tax Faculty has formulated Ten Tenets for a Better Tax System. This comprises 10 key characteristics against which to evaluate tax systems and tax policies, which include: simplicity, certainty and reasonableness. Read the full list and download the detailed paper.
- Statutory: Tax legislation should be enacted by statute and subject to proper democratic scrutiny by parliament.
- Certain: In virtually all circumstances the application of the tax rules should be certain. It should not normally be necessary for anyone to resort to the courts to resolve how the rules operate in relation to his or her tax affairs.
- Simple: The tax rules should aim to be simple, understandable and clear in their objectives.
- Easy to collect and to calculate: A person’s tax liability should be easy to calculate and straightforward and cheap to collect.
- Properly targeted: When anti-avoidance legislation is passed, due regard should be had to maintaining the simplicity and certainty of the tax system by targeting it to close specific loopholes.
- Constant: Changes to the underlying rules should be kept to a minimum. There should be a justifiable economic and/or social basis for any change to the tax rules and this justification should be made public and the underlying policy made clear.
- Subject to proper consultation: Other than in exceptional circumstances, the government should allow adequate time for both the drafting of tax legislation and full consultation on it.
- Regularly reviewed: The tax rules should be subject to a regular public review to determine their continuing relevance and whether their original justification has been realised. If a tax rule is no longer relevant, then it should be repealed.
- Fair and reasonable: The revenue authorities have a duty to exercise their powers reasonably. There should be a right of appeal to an independent tribunal against all their decisions.
- Competitive: Tax rules and rates should be framed so as to encourage investment, capital and trade in and with the UK.