Budget 2012: Tax statements increase transparency

As part of yesterday’s 2012 Budget announcements, Chancellor George Osborne introduced the new Personal Tax Statement, which will come into effect from 2014–15. With the aim that “taxpayers should be able to easily understand their tax” in interests of transparency, these statements will be provided to around 20 million taxpayers, detailing how much we pay in tax and what this is spent on.

Mock-ups issued by HM Treasury show a personalised break-down of where our taxes go.

A mock-up of what the personal tax statement may look like, introduced in the 2012 budget ©HM Treasury/PA

This is a good step forward for those advocating transparency and accountability of government. It is also a positive move for those working in aid; public support for aid often wavers in times of austerity and a common perception is that we spend far more in this area than is the reality. Someone on a salary of £15,000, for example, would know that they contributed less than 50 pence per week to overseas aid. These statements will be a useful tool for highlighting the relative size of UK aid spending alongside other taxation costs (of which they represent around 1%), and will hopefully contribute to an increase in public support for aid.

Budget watchers looking out for changes to UK aid spending can breathe a sigh of relief, as this has not been cut: aid remains ring-fenced with the international aid target of providing 0.7% of gross national income (GNI) as official development assistance (ODA) by 2013 still in place. The Office for Budget Responsibility’s growth forecasts for 2012 published alongside the budget are 0.1% higher than the previous prediction; had the reverse been the case, we could have seen cuts in DfID’s budget, as happened last year.

This is very welcome; at DI we have long advocated for a commitment to retaining aid spending levels and transparency in aid, maintaining that aid works, and delivers results when handled effectively. It is this last point which is key: aid effectiveness. Figures from the ONE report published this week, Small change, Big difference, developed by analysts at DI, also support this stance. The report outlines that if the UK keeps its promise on aid spending, it could help put 15.9 million children through school over the next 4 years, and help 5.8 million mothers give birth safely.

The UK’s Department for International Development is one of the world leaders in the area of aid transparency, a fundamental component of aid effectiveness, to which it is firmly committed. Yesterday’s introduction of personal tax statements has emphasised this.