The Finance Bill is always a mix of many different elements, ranging from the enactment of Budget measures to new anti avoidance moves. The 1997 Bill, published yesterday, has objectives as diverse as encouraging the film industry to cracking down on the illegal sale of tobacco products. As ever, tax accountants and finance directors will eagerly examine the detail to assess the impact of the new measures.
However it must not be forgotten that the Bill is also designed to enact the Budget day tax changes. ,The Government will realise that the public will start feeling the benefit of the Budget package from next month on. The Minister for Finance, Mr Quinn, said that the publication of the Bill clears the way for the 1998 Budget, which will be presented this year at the end of October. Most commentators believe that an election will be held in the meantime.
The extent to which the Budget day changes will register with the electorate, remain to be seen. Certainly, many middle income households will be better: off as a result of the package, particularly when the abolition of the residential property tax is also taken into account. Recent Budgets have also made some progress in attacking the disincentives to work inherent in parts of the tax system and in promoting enterprise.
Many of the specifics of the Finance Bill have been well flagged in advance. The Budget, of course, outlined the Government's broad intentions, while the Minister for Finance, Mr Quinn, has also introduced the welcome innovation of providing broad details of his intentions for the Bill a few weeks before its publication. This allows potential difficulties to be ironed out in advance of the publication of the detailed legislation.
Obviously the anti avoidance measures cannot be signalled in advance. The 1997 Bill contains a range of new proposals in this area, which at first glance appear reasonable attempts to close off tax loopholes. Among "the new measures are moves to eliminate tax avoidance in the property market and new measures to clamp down on the illegal sale of tobacco.
Whenever the next election comes, the plans of the different parties for the tax system are likely to be an important issue. Much remains to be done to reform the taxation structure, and doing so is an essential step in preparing the economy for membership of economic and monetary union.
The Government is already actively examining one fruitful area of reform - the encouragement of employee shareholding and profit sharing schemes. Such schemes could prove useful in allowing businesses to be sufficiently flexible to prosper within monetary union.
The Government also needs to consider what other reforms of the taxation system are necessary to foster a continued improvement in competitiveness in business. The planned move to monetary union must be accompanied by a new focus from policy makers on the building of long term competitive strength. All the political parties might turn their minds to these issues as they prepare their plans for the election and consider what tax reforms they would propose if elected to Government and how they would pay for them.