The Dangers of Straightjackets

John Whiting, spokesman for the Chartered Institute of Taxation, recently spoke out against HMRC's myopic revenue neutral "straitjacket" rule. He urged HMRC to grasp the point that reform may cost money in the short term, but lead to savings in the long term

In other words, Mr Whiting was asking HMRC to enter the real world and think strategically.

"The tax authorities have got to get rid of this 'revenue neutral' straitjacket.

The starting point seems to be that reforms have to be revenue neutral. Businesses understand that you have to invest to make money and perhaps the government should take the same view.

You can't have a tax system where you're handing out cash willy-nilly, but you must also spend a pound to raise a pound sometimes."

He added:

"If I spend a pound to raise 90p and also cut 10p in admin costs then I would also see that as revenue neutral. More attention needs to be given to the admin costs of taxpayers."

Fair point!

The question is, can HMRC see beyond the short term and beyond the 2010 election when Labour will be kicked out of orifice?

Tax does have to be taxing.

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