The Chancellor’s Spring Statement next week has been trailed as not being a fiscal event. Consequently we don’t expect to see any changes to the tax system next week, although we there may be some changes to government spending plans – possibly to address cost pressures in health and defence.
The benefit of just one fiscal event a year is it will give the Treasury and HMRC more time to work on developing tax policies. This is to be welcomed, given that a typical fiscal event in recent years has involved over 50 different tax policy changes. A reduction in the number of such changes and better thought-through policies will be good news for individuals and businesses.
That is not to say that tax policy changes aren’t desperately needed. As our chart this week illustrates, there are now up to eleven (!) different tax bands on personal income depending on where you live and whether you have children or not. How we got to this sorry state of affairs is a complicated story, but it should not be beyond the wit of policy makers to get us out of it.
So the best thing about the Spring Statement next week may not be the absence of tax policy changes, but rather the eventual prospect of better tax policies in the future.