Looking through the budget, and there’s a perfect example of what’s wrong with the Brownian approach, in the form of the new ISA changes. As some readers may know, ISAs are a not insignificant part of this Angle’s day job, and indeed I’m all in favour of the increase in the allowance to £10,200 (although what this recent trend to slap £200 on the figure is about[1], I still don’t know). The problem I have is with the specifics.
The increase comes in as of the new tax year for most people, which is great, but over 50s can invest up to the limit this year, but not until October. Why? What on earth is this special temporary rule for? Why make providers devise and implement extra checks on dates of birth and maximum investment, only to render them obsolete a few months later? Investors have suffered enough from the sharp drop in the value of their equity investments and the interest they can get on cash, without driving up the administrative costs.
The gradual withdrawal of the personal allowance for those that earn over £100k is another example. If I’m reading the Red Book correctly (which I may well not be), this will save about £100M in ’10-11, on a total cost on allowances of a bit over £45G, but it complicates the process of working the tax out correctly, and introduces a strange ‘hump’ in the tax rate. There’s already two perfectly good variables (rate and threshold) for each tax band, why not just use those?
This is the hallmark of Brownian government, the implementation of any and every policy in the most complex and burdensome manner possible, and by now appears endemic in HMT (see endless tales of Tax Credit woe), and I can propose only one cure: More board game geeks in the Treasury.
Fans of good board games should appreciate how a well-crafted rule can implement some desire of the designer, while endless twiddly bits serve only to annoy the players and cause general confusion and arguments. Good rules are elegant, simple yet effective. If we ran all proposals past a panel of boardgamers, we might just end up with a better tax regime.
Mind you, there’s a risk they’d try and get us to put Sterling on the GeekGold standard.
[1]The allowance was £7000 for years, and was finally raised to £7,200 this year.
Where Angles Fear to Tread 