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Fairness incompatible with tax principles

The Treasury select committee’s principles it will use to measure future tax policy have been dismissed as incompatible by Taxbriefs editorial director Danby Bloch.

This week, the committee published its report, Principles of Tax Policy, which sets out six principles it would measure policies announced in future Budgets against. The first principle is fairness. The committee says if the tax system is considered fundamentally unfair it will fail to command consent. The report notes that there is little agreement on what constitutes a fair tax.

The remaining principles include to support growth and encourage competition, provide certainty and stability and be practicable and coherent.

TSC chairman Andrew Tyrie says the aim of the report was to produce principles “on common ground which are accepted across the house”.

Bloch says the principles are incompatible. He says: “Everyone in the world would agree with the principles but they do not agree with each other in practice. As soon as you introduce measures to encourage growth, you tend to favour one group over another.

“Objective fairness in tax rarely exists, there are only percep- tions of fairness.”

Prudential manager for tax and trusts Gerry Brown says: “These principles are not going to stop people arguing about tax but it is helpful to restate the principles underlining tax policy to remind legislators there is more to the system than the provision they are working on.”

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