Annual Tax Summaries hit the doormat

November 03, 2014 10:38 AM

This week sees a quiet revolution, as the first Annual Tax Summaries hit the doormats of some 24 million people.

These Summaries will demonstrate how much individuals have paid in Income Tax and National Insurance, and how that money has been spent. Championed by Ben Gummer MP, the Summaries are a crucial step forward in opening up the tax-and-spend system to real scrutiny.

One of the many problems with the tax system is a lack of transparency – so taxpayers can’t see what their money is spent on. That makes it difficult for the public to scrutinise spending decisions; how can we judge value for money if we don’t know how much money has been spent on something?

If you pay £5 for a glass of wine at a restaurant, you expect £5 worth of value. That means you send it back if you’ve received a short measure, or if there’s lipstick on the glass, or if the wine is off. It’s very difficult to do that when it comes to tax, which means there’s less incentive for Government to ensure their services are up to scratch.

The Summaries should, in part, change that. Furthermore, while they’ll still leave out all of the other taxes you pay – on everything from holiday insurance to a pint at the local – they will at least point out the anachronistic way we still consider Income Tax and National Insurance contributions to be somehow different.  As we’ve written many times before, that’s simply not the case.

But the Summaries, nonetheless, will serve as a useful reminder that every penny spent by Government has to be raised by Government. Considering the size of our debt, let’s hope the Treasury remembers that too.

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