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Office for Tax Simplification: Yes Please.

The new independent body, which will be officially launched by the Chancellor today, is tasked with reforming Britain’s tax system to reduce the burden of red-tape on businesses. It is just as important to stamp out obvious waste and streamline procedures.

The Office is a key part of the coalition Government’s promise to help British businesses, particularly small and medium sized firms.

When it was formerly announced in the emergency Budget last month, Mr Osborne said: ‘Tax competitiveness is not just about rates and incidence of tax. Predictability, stability and simplicity are also important.’

Business owners are sceptical about the new Office because, despite pledges from a succession of Governments to reduce red tape, business owners claim the system has become increasingly complex.

Here are some recent examples gathered in a 2 minute straw poll.

Identification procedures are required but need simplification as irritate everybody

  • Getting the tax office to answer the phone is a major achievement.
  • Getting through to someone who can help is a further challenge.

We know of two instances where HMRC has phoned individuals tax payers on a Sunday for information. If this is a new policy they need to inform people as the first reaction is scam.

The British tax code is among the most complex in the world, and that it has been getting worse every year.

Pick the low hanging fruit first – combine tax and national insurance – a tax by any other name would be a good starter.

Even professional accountants are uncertain as to the meaning of a lot of the tax legislation and the costs of unravelling the interpretation gets passed back to the small business man in the street by way of higher accountancy fees.
The British economy faces a triple whammy of higher inflation, lower growth and rising unemployment, according to one of the Bank of England’s most senior policy makers. Living standards over the next few years will rise only “minimally” or put another way could fall in real terms.

Also ‘quantitative easing’ – the Bank of England’s way of force-feeding money into the economy – is again at the centre of the Monetary Policy Committee minutes. We hope this is for academic completeness rather than a serious suggestion to start the printing presses again.

Andrew Sentance may continue to win headlines for his obduracy on interest rates, thinking they should rise to head off inflation, but the debate is moving on.

The combination of a soft American economy, Europe’s fiscal squeeze and Britain’s lending drought suggests that the UK economy faces rough times ahead, with a real drop in spending power.

There is worse to come with the fiscal squeeze starting to bite, real incomes under pressure and house prices, the primeval force in the UK economy, starting to flag badly.

So we could see:

Increasing interest rates to try to curb inflation
A House price drop of 15-20% in the next 12 months
Sharply increasing unemployment
Reduced expenditure, therefore lower demand leading to a double dip recession.

Tomorrow the results of the stress tests on 91 European banks will be released. If they all pass the wrong questions have been asked. If a number fail then tighten your belt, hang on to your hat we are on an economic rollercoaster and equities could fall sharply.


Author: Chris Slay

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