It is recognized that the ultimate authority for tax legislation, and the underlying tax policy, rests in the hands of the legislature. That said, the complexities of taxation in the modern world lead to a proposition that few would contest, being that all stakeholders can benefit from a consultation process with respect to tax legislation, be it technical in nature or as part of a tax reform initiative. Taxpayers benefit because, among other things, they have an avenue into the consultation process, and although there may not be agreement on the tax changes being considered, at least they can feel they have had a say. The tax authorities and those responsible for drafting the tax legislation can benefit from the input of tax advisors who are knowledgeable in the area, and who can provide a unique professional and practical perspective which may not have been considered by the architects of the legislation. France is a fitting example of this, witnessed by a defeat of a proposed tax increase in the Constitutional Court which was later enacted after it was corrected.
Overall, a consultative process, albeit non-binding by necessity, leads to a perception of greater fairness in the bringing about of changes in the tax system, which benefit all stakeholders. It is therefore recommended that a consultation process should be part of a modern tax system. Without a firm basis for a consultative process whereby tax changes ultimately become law, very often this process does not exist at all, or exists only on an ad hoc basis where it suits those involved in drafting the legislation. Furthermore, our survey indicates that the consultative process is a part of the tax system in certain countries (e.g. the U.S.), where clearly it must have a beneficial impact (or it would not have been included), so why should the process not be extended universally?
The inclusion of a consultative process in the making of tax legislation could lead to delays in the process, and this is an argument advanced for not having it. However, the benefits will invariably outweigh any disadvantages. Accordingly it is our view that the inclusion of a requirement for a consultative process forms an important part of a Taxpayer Charter.