Thursday, 22 March 2012

we're all to blame for the complex mess of the budget and tax code.

One has only to glance at the coverage of the budget and two things leap out; that the tax system is too complex and the public's interest in it is myopic.

Every website has a calculator so that "people can work out how this budget effects you". The methodology is crude approximation with no account of the bigger picture.

The rate of economic growth, interest rates, level of government debt, distribution of public spending, productivity and investment will have far more bearing on most households standard of living yet it is given little coverage. Instead the "analysis" focuses on how much extra tax a household might have to pay for the number of cigarettes they smoke.

Given that I believe these macro variables are more important, it doesn't make sense that the system is so complex. I don't believe that politicians and civil servants are capable of fine tuning and controlling the system well enough to justify the level of complexity and resources required for its administration.

These points are not unrelated. It is too easy for a chancellor to tweak policies and add more layers of complexity to the system in order to claim that they have done something for a particular special interest group, or are clamping down on another. We only have ourselves to blame.