Call for Evidence

The coronavirus pandemic has had a major effect on the UK economy and public finances, and when the economy recovers from the crisis, debt levels will be significantly higher than they were before. The UK will need a strong tax base to maintain the level of public services at sustainable rates of borrowing. The crisis has also brought to the fore issues such as whether the Government’s economic response to the pandemic should be reflected in changes to taxation.

The UK tax system has been largely unchanged for many years, whereas the 1960s, 1970s and 1980s saw a number of radical and far reaching reforms. But even before the crisis there were a number of pressures building up in the tax system which had already led to calls for reform. For example, demographic shifts are changing the tax base and demands for public services, and the growth of online- and data-driven employment and business models are eroding traditional sources of taxation and raising questions about the future of the tax system. The reconstruction of the economy after the unprecedented economic fallout of the coronavirus pandemic is an opportunity to reflect upon and address these issues.

Please note that earlier written submissions are more useful to the Committee, as they can be taken into account during the course of the inquiry.

The Committee is seeking evidence on:

o What are the major long-term pressures on the tax system in the UK, including those arising from changes in working practices, demographics, the environment and other factors? How are these affecting the efficiency of the tax base and the overall level of demand for public services?

o What more can the UK do to protect its tax base from erosion as a result of globalisation and technological change, and what further impacts will the coronavirus pandemic have on our tax base?

o Do these pressures need to be met with tax reform, and if so, is this the right time for reform?

o What overall level of taxation can the economy bear without undesirable or counterproductive harm to economic growth?

o Which areas of the tax system are most in need of reform, and which are best left alone?

o What reforms should be considered in response to the pressures on the tax system?

o What is the role of tax reliefs in rebuilding the economy and promoting economic growth and efficiency? Does the current regime of tax reliefs perform this role well?

o What are the areas for simplification?

o Is there a role for windfall taxes in the post coronavirus world?

o What is the right balance between taxation of work, savings/pensions and wealth?

o What is the best way to tackle tax reform, including what changes might be needed at HMRC to support implementation, and how should the Government consult with stakeholders and parliament?