Broad brushstrokes

Oct 01, 2018
It may take another economic calamity for policy to once again become aligned to the legitimate interests of business.

We forget in this era of the welfare state and social services that for many centuries, the only connection most people had with the government of the day was via the tax system or the penal system. There were tithes long before there were state pensions, excise duties long before there were state-sponsored schools and hospitals. Maybe there is some relic of this folk memory which engenders the hype and the debate about relatively minor tax changes each year.

Tax debates are often a welcome distraction for government. They provide politicians with cover not to dwell on the vast sums expended on the health services, HSE and NHS alike that still leaves so many of us on waiting lists, or on the housing crises currently being suffered both in Ireland and in the UK. Add skills shortages and Brexit to this list, and there is an extraordinary confluence of concerns on the political agendas of both jurisdictions.

Lost in the noise

Business is having a tough job getting its concerns heard against the clamour of the major public policy items of housing and health. Even the Brexit political debate is now more centred around issues of migration and political sovereignty than trade and commerce. Given that the EU project started life as the facilitation of commerce to deflect causes of conflict, this is quite an extraordinary turn of events. But the official attitude among the negotiators seems to be that businesses will somehow find solutions and be able to cope.

As a generalisation, that is probably true. It is informed by past commercial responses to various disasters which have crippled international trading opportunities, both natural and self-inflicted – from foot and mouth disease to oil crises to tariff wars. There is a qualitative difference, however, to the way in which government policies across the globe are impacting business this time, and that is the extent of the uncertainty in their impact.

An embarrassment of uncertainty

There is just so much we don’t know – from the status of professional qualifications and staff availability post-Brexit, to the future availability of tax credits for companies with a US footprint. Change to the regulatory, tax and trading environment is everywhere, but governments and institutions are either unwilling or unable to spell out the details of how these changes will take effect.

Political expediency seems to be suggesting that policy change can be effected in broad brushstrokes. To keep away the devil, the details must not be provided. Instead, we are given a big picture and asked to buy into it – the prospect of re-invented trading arrangements, new tax regimes, a future with less regulation and red tape.

The “post-Gove” era

How has all this vagueness been allowed to develop and come so much to the fore? It may be partly down to the quality of our politicians and policymakers, who underestimate or have been poorly briefed on the complexity of the issues they deal with. It may be a rose-tinted perspective on the power of the information technology that supports business activity. To put it bluntly, the accountancy profession along with other expert professions do not get the same hearing from government as it did prior to the Great Recession. We are indeed in a “post-Gove” era where no-one wants to listen to experts.

It may take another economic calamity – a hard Brexit, a tariff war, another banking collapse – for the development of policy to become more closely aligned again to the legitimate interests of business. That is too costly a way to repair the uncertainty.

Dr Brian Keegan is Director of Public Policy and Taxation at Chartered Accountants Ireland.