Tories aim to stop chancellors having "bright ideas"

The Conservatives today unveiled new plans for greater scrutiny of tax changes, a way to stop future chancellors having "bright ideas".

The final report by a working party chaired by former chancellor Lord Howe proposes an independent body - the Office of Tax Simplification (OTS) – to follow the example of the National Audit Office (NAO) and examine changes to the tax code.

Lord Howe explained part of the job of the OTS will stop future chancellors having "bright ideas" that can often lead to further tax complexities.

"Chancellors are often infected with bright ideas. One has to be extremely cautious, as lolly pops can be a dangerous thing.

"The OTS will say 'hang on chancellor, let's think again'."

He added: "No sensible chancellor would bring in fiscal innovation without consultation."

The report –commissioned two years ago – comes after chancellor Alistair Darling has come under severe criticism for failing to consult fully over tax changes after the changes to non-doms' tax and the 10p tax rate among others.

Conservative shadow chancellor George Osborne said: "Yesterday saw the final parliamentary stages of the 2008 finance bill.

"The history of this complex and unwieldy piece of legislation provides a perfect lesson in how not to make tax policy.

"The story of badly thought out proposals, complex initiative and humiliating u-turns that have gone into making this one bill almost as long as the tax code itself."

Besides establishing the OTS, the Howe Report recommends the creation of a joint committee – with members from both the House of Commons and House of Lords – to strengthen the oversight and scrutiny of tax legislation.

Also the report promotes the establishment of a convention that any changes to tax law should be proposed no later than the pre-Budget report.

"With these changes there will be no more stealth taxes. Future governments will no longer be able to bury the bad news in the small print," Mr Osborne said.

Mr Osborne went on to reiterate Tory pledges to only cut taxes if it is right for the economy.

"It is a good aim to reduce tax, but there must be stability before tax cuts."

He added the Conservatives would aim to aid small business and the tax complexities they face, "without support from finance departments", over PAYE tax and VAT.

Despite the plans to limit the power of future chancellors, how much of the proposals would be introduced if the Tories came into power was not stated.

Also the plans include the right for a chancellor to circumvent the systems of checks if needed.

Daniel Barnes