The Public Accounts Committee (PAC) has called on the UK Government to “account” for its tax giveaways, in a report published today (20 July).
According to the report, the Government knows “too little about the tax reliefs it provides, whether they work, or offer value for money, or even how much they actually cost”.
The report states that the 10 most expensive UK tax reliefs cost the public purse £117bn a year – equivalent to giving up around 5% of GDP in foregone tax revenues.
Among the most expensive, pension reliefs were forecast to cost £38bn in 2018-19 – but the PAC said the Government has not made any assessment of whether that huge cost actually encourages saving for retirement or reduces dependence on state retirement benefits.
Additionally, the PAC said when recent reforms to entrepreneur’s tax relief were announced, it was revealed that nearly three quarters of the £2bn a year cost benefits just 5,000 individuals.
The Committee is calling for the Treasury to set out clearly the range of UK tax reliefs, with their intended objectives, so “proper assessment” can begin on whether these breaks are achieving what they’re meant to.
Meg Hillier MP, chair of the committee, said: “Every Budget we get tax breaks announced like baubles hung on a tree and they generate great headlines but the truth is the Government has little clue about the value of an enormous cost to the public purse.
“It sometimes fails to predict with any accuracy what tax breaks will cost, and there is often too little interest in whether it delivers what it intended to.”
She added: “Tax breaks are not freebies – they cost the public purse hundreds of billions of pounds in lost income. The Government must know who they benefit and to what end. It’s all still taxpayer’s money and the Government must account for it.”