Orders of the Day — Viii. Major Measures

– in the House of Commons at 12:00 am on 15 April 1969.

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I now approach my major taxation proposals. First, however, I would like to say something about my attitude to taxation reform. I hold to the view that novelty for its own sake should not be a Chancellor's aim. There is a great deal to be said for preserving some stability in our taxation system. Otherwise far too much time and energy is devoted to adjusting from the old to the new. Second, I must continue to give great attention to the overstrain which persists in the Inland Revenue. The two major and worthwhile changes of 1965 were a heavy meal to digest, and the process is still not complete. I could not in these circumstances justify measures, possibly desirable in themselves, which would involve great administrative tasks, particularly of valuation, for little revenue, as in the case of a gifts tax or, even if the revenue were greater, as in the case of a wealth tax, for little demand effect. The result would have to be either an attempt at very heavy new recruitment; or a deteriorating service to the public, with a less efficient collection of existing taxes; or, worst of all, a combination of the two.

Within the existing framework, however, I am constantly urged to produce simplification. I am instinctively sympathetic to such pleas. The present system is undoubtedly complicated. It involves a lot of work for taxpayers and their professional advisers as well as for the Revenue. It also leaves many people mystified as to what they are paying, and why. [Interruption.] The Inland Revenue is not my creation or that of my right hon. Friend. But this complication springs primarily from two considerations. First, the need to be as equitable as possible. It is an illusion to think that simplicity and equity are natural allies. They are much more often rivals. And second, the need to combat the ever more ingenious search for loopholes through which tax-avoiders can escape. Nor would any remotely practicable tax reduction obviate this search. Sweeping measures of all-round simplification are therefore not easily to hand. Even apparently straightforward changes, such as the amalgamation of Income Tax and Surtax, which I would certainly favour in principle, bristle with difficulties. I do not say that none of these can be overcome. But there is no single, complete solution which can be achieved at the stroke of a pen.

This being so, it is the more important to ensure that additional difficulty and delay is not caused by unnecessary administrative procedures. The Inland Revenue now collects over £6,000 million a year. There is a great burden on all tax offices, and I am glad to have this opportunity to pay tribute to the way it has been tackled. But inevitably organisational structures have grown up which may no longer be appropriate to modern conditions.

A panel of the Bellinger Committee is at present examining the work of the Inland Revenue to see whether there are any processes that can be cut out; and the Estimates Committee is once more reviewing the whole Department this Session. When we have these reviews I shall consider whether a further study by outside management consultants would be helpful—both to the Inland Revenue itself and also to taxpayers and their professional advisers.