Tax policy ideas come from a variety of people and organisations – not just the Chancellor of the Exchequer. This includes other politicians, civil servants within HM Treasury and HMRC, businesses and other entities. However, ultimate responsibility for taking tax policy decisions rests with the government of the day.

The challenge is that very few policy makers and pundits are sufficiently aware of the policy making process. Of these, not many understand tax.

ICAEW’s Tax Faculty has long been an advocate of education in this very niche area. Anita Monteith, Head of Taxation Policy at ICAEW, has been presenting the tax policymaking process to undergraduates from Queen Mary University of London and the University of Bournemouth. These academic institutions are among those that include an element of tax in their undergraduate degree programmes, some of which have a policy focus.

Monteith explains: “Much of my career has been spent talking about tax policy. During the sessions I have had with these students and with others, I have encouraged them to consider how they might target their own policy ideas.”

In particular, the students have been encouraged to identify and avoid unintended consequences, and to consider the costs and practical implementation process. Finding that the cost or benefit of the tax change misses its ultimate target is a common fault.

For example, when sanitary tampons were zero rated for VAT, the shelf price wasn’t immediately reduced. Others in the supply chain received the financial benefit instead. Monteith says: “Those who know me will also know that I never fail to point out the traps and pitfalls to policy design of the UK’s 5 April tax year end.”

When given the challenge of devising any new tax policy, there is an immediate tendency to over complicate the design and trying to make it do too much. Generally, it is not possible to raise tax for the Exchequer at the same time as changing people’s behaviour.

“It is gratifying to see how many of the students I speak to want to use tax to help achieve net zero or achieve other environmentally sustainable goals,” Monteith says. “On more than one occasion, a tax on plastic packaging was suggested. They didn’t know we had a tax on that already because they couldn’t ‘see’ it. They also wanted to pay more tax for air travel but hadn’t considered the impact on business.”

Suggested changes to tax reliefs are also popular with those newer to tax. But those changes can bring different problems. The Office of Tax Simplification spent a long time looking at tax relief changes. There is now a lot more information on the policy intent and the costs of individual reliefs available on GOV.UK.

“The students I have met recently will let their imaginations run, I hope. They do not need votes from the constituencies they represent,” Monteith says. “Some of them will be developing their own ideas during this academic year – it will be interesting to see where it takes them.”