Running Head: Article Review 1

Article Review

On

Policy Forum: Building a Tax Review Body That Is Fit for Purpose—Reconciling the
Tradeoffs between Independence and

Impact

By

Date
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Summary of the Article:

The article discusses and elaborates on the several options of the supporting and
structuring of the federal tax review system of Canada. It provides the two principles for the
structure of the tax reviewing body. Firstly, it shows that the function should be the directing
guide for the form of the body for tax review system. Secondly, it shows that the aim of policy
change should not be ignored, as a credible review with no influence over government policy
would not be much significant. The author shows the strengths and weaknesses of all the
traditional models of task forces, reviews by government officials and royal commissions. It
shows how the task force has limited scope and time limitation while the royal commission has
larger resource pool, greater authority and higher access to the government data; it usually gets
influence from the government as well. The author has focused on the significance of the trade-
off between the influence on government policy-making and independence from the government.
The article shows how the different approaches have their different strengths and weaknesses in
terms of being the mechanism of conducting a transparent, comprehensive, influential and
independent review of the tax system. Other than these, some international systems like the
Mirrlees review of the UK have also been reviewed in the article. Furthermore, the researcher
has focused more on answering how the tax review can be conducted effectively rather than on
what it needs to accomplish. The article also suggests the creation of publicly funded body for
conducting analysis, making policy recommendations and for engagement of the stakeholders.
Furthermore, the author also suggests having a system or policy body which is always reviewing
the recurring social and economic changes in terms of the tax system and provides periodic
recommendations.

Main Research Question:

The main research question that the article is answering is how the tax review should be
accomplished or undertaken. The article starts on by explaining the importance of overlooking
on how a tax review system of Canada is resourced, structured and run. The article confirms that
any tax review might be unsuccessful it is not built for a purpose, even though the purpose could
be varying; still, it is important to look at the administrative questions and the accountability and
mandate of the tax review system as well. Whether the tax review is done in the form of a task
force or commissioned activities, or whether it is conducted as internal exercises, the dependence
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on the government and its closeness to the institutions of the government is also important to be
considered. Firstly, it shows that the function should be the directing guide for the form of the
body for tax review system. Further on, the author shows the strengths and weaknesses of all the
traditional models of task forces, reviews by government officials and royal commissions. It
shows how the task force has limited scope and time limitation while the royal commission has
larger resource pool, greater authority and higher access to the government data; it usually gets
influence from the government as well. The article shows how a very credible review outside the
government would be termed as highly authentic but would not have the public mandate.
Therefore, for the public mandate and influence on the policy change, the structure of the body
has to be under the government as well. However, being entirely under the direction of the
government would not make it authentic. Therefore, the author recommends the formation of an
external body at arm's length of the government.

The article answers the question of the tradeoffs between the independence and impact of the
review system on government along with the administrative concerns of accountability, mandate,
and resourcing of the review system.

Economic Importance of the Research Question:

The tax review system is an important activity which is essential for creating incentives for
business development as well as for economic growth. While some would consider this as a task
aimed for the creation of a mechanism that would reduce economic inequalities and improve the
distribution of the resources, there are others who consider it as an activity which should remain
easily understandable as well easily compliable. There could be many reasons for which a policy
review of the tax system could be conducted. However, the mechanism of conducting a tax
review is often ignored which holds similar importance as well. The governments need their
taxes to be fairer, simpler and less damaging then it is currently. For this reason, it is always
looking for better measures and better mechanism leading to the tax reviews. Thus, the research
question of having a tax review system which would have the right balance of external and
internal stakeholders and the right balance of access to and influence of the government would
mean a lot. The answer to this question would lead to a mechanism or structure of tax review
system that would not only enhance the tax system but indirectly help in the economic growth
and equal distribution of the resources.
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How the Research Question is answered

The Question of how a review system should be accomplished is answered by this article by
looking at some main principles of the activity. The first principle as referred in the article by;
“Form should follow function” shows that the body which is charged with the review of the
Canada tax system should have the structure as determined by the aim of this body. This would
also determine how much independent the body is going to be. The article suggests the body to
deliver a package of proposals for the comprehensive tax reforms. It urges that the mandate of
the body should be to conduct a system-wide federal review and then subnational taxation as
well. It also focuses on the need for transparency by making the recommendations public. This
would lead critics to scrutinize the recommendations before its actual implementation.
Furthermore, the package of proposals is to be grounded in a clear manner which should be
independent of the current policies. The transparency of the review system could only be made
effective if the theories or assumptions on which the system is built is made explicit. The need
for the new assumptions or any changes in assumptions should be made public as well. The
article shows that these three features of a body would allow it to get input from experts and
stakeholders outside the government while it reports a detailed explanation to the public. It
shows that these features would enable the advisory body to discuss the goals independently
from the policy goals of the current government. The structure holds for a body which is located
outside the federal public service and is independent of the impact of the current government in
power. For this reason, the article has shown how public servants and department officials do not
have independence as is needed in this task for conducting a transparent and comprehensive
review of the tax system. However, as they are the subject experts and have unparalleled
information on the task their contribution is necessary. However, this contribution should remain
within the bargain between the officials and government. This refers to the structure of a task
force, or commission or an entirely independent private think tank. Thus, this would be the best
options. However, each of these enjoys a different level of independence from the government
and access to the government.

The second principle; "Form should support policy change" builds on the fact that the structure
of the body should have a balanced level of independence and access to the government in order
to support the policy change and have an impact. The article shows interesting examples of the
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structure of the body and its level of independence and the pros and cons of each of the
mechanism. It looks at the body which conducted the British Mirrlees Review. It was a private
think tank which involved scholars. The article shows how the academic credibility of the review
also became the reason for the lack of accountability and mandate. It shows that even though
such structures provide authentic recommendations, it is not considered much impactful as it
does not have the public mandate behind it. Thus, a structure that is as isolated as that of Mirrlees
Review would not be appropriate for having a policy impact for the tax review system. Thus, this
shows that public mandate is important. Therefore, there could be two forms of public bodies
which can be used for the tax review; the royal commissions or the task forces. The article shows
how the task force is not a good choice for a comprehensive review of the tax system. The task
force is usually based on narrowly defined problems and has a limited time and scope. On the
other hand, there is the option of royal commissions. These have the investigative powers and
have access to federal tax data. Furthermore, these can also hire experts and can draw resources
from the revenue fund of the government. These features certainly make the royal commission a
possible choice for the tax review system body. However, it is not the case. The article shows
that royal commissions are usually very costly, and have the tendency to be used by governments
for delaying purpose. Furthermore, the time span is either very short which makes it less
comprehensive or either very long that the main aim is diluted with the change in governments.

The author shows that both ad-hoc bodies are ill-suited as per the nature of the job of the tax
review body. The answer to the research question is devised from this analysis of the several
structures of bodies. The article answers by referring to the need for a permanent body which can
become the body of expertise for the recurring economic and social problems. The on-going
body would provide the benefit of having no end point to which the government can delay its
actions. Furthermore, it would become a formal part of the system of policy making while
remaining at a length from its government institutions. The example of the Canadian advisory
body which fulfills such standard is given as well. The Economic Council of Canada is the
national body which has the public authority to collect data, make recommendations, conduct
analysis, and still remain at arm’s length from the government. This body has been structured as
the Crown Corporation which is accountable to the Parliament and has to report annually to the
public. It reports to a minister but it is not under the direction of this minister. The body can
make recommendations whenever it sees it. The government public service employees work
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under the body for some period of time and then they return to or move to another agency or
department. The members of the council are also from various backgrounds and it actively
engages stakeholders from outside the government. The article shows that the tax review system
body of Canada should also have such an advisory body which can manage the balance of having
influence and proximity along with enjoying the political independence from the government.

Is the Research Question answered effectively?

It can be said that the research question is answered effectively. The research article
methodically builds on towards the answer by explaining all aspects of the various tax reform or
review systems currently being used in the world. It gives examples of the American, British and
Canadian tax review systems as well. Firstly, it provided ground for having a body that would
work outside the day to day operations of the Canada tax system, it then follows on to provide
evidence of the lack of influence of a body that is completely outside the government. The
Mirrlees review is explained here. It shows how even with all the credibility that it enjoyed
because of its lack of influence from the government, it was not considered important in the
public eye. This provided the options of having a public ad-hoc body for the tax review system.
The article then discusses the two ad-hoc bodies; the task force and the royal commission. Both
with their advantages and their disadvantages are explained in detail. In the end, both are shown
to be ill-suited for the activity of the tax review system. This leads to the suggestion of an on-
going advisory body which remains at arm's length to the public institutions, however, enjoys
access to government data, and is able to have public influence and is actively engaging outside
stakeholders. The example of the Economic Council of Canada is also provided which makes it
more effective as it does not provide any ambiguity in the suggestion. The author further argues
that for the comprehensive tax reforms, the opportunity for formation consensus should be
looked upon seriously, as the recommendations of this consensus body are to be implemented
into policy. This would lead to more public engagement. This would require more time, more
collateral effort and more independence as well. Furthermore, the article also forces on the need
of the advisory body to provide accountability of their work and to remain in the debates that
follow the recommendations. The author sheds light on the need for a standing external body
which is a part of the policy-making system but is also at arm’s length to the government. The
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author shows that tax reviews should not be a one-time exercise; it needs to be reviewed
constantly over time with the recurring economic and social changes.

Suggestion for Improvement

The article effectively answers the research question and also provides examples from other tax
systems to better convey the message. The answer to having a standing external policy body
which would also have federal employees temporarily under it is rightly explained with all its
pros and cons. The example of the British Mirrlees Review, American tax review of US tax
code, and the Canadian Carter report are rightly explained. However, it could have been made
better if the examples of the external advisory body like the Economic Council of Canada from
outside Canada could have also been provided. Furthermore, the article would also be more
improved if the weakness or limitations of this structure were also discussed.

Reference:

Robson, J. (2018). Policy Forum: Building a Tax Review Body That Is Fit for Purpose—

Reconciling the Tradeoffs between Independence and. Canadian tax journal , 66 (2),

375-386.