There has been an agenda
since the early 80s to privatise things – first it was industrial groups and public
utilities, then the railways, PFI and outsourcing, and now it has moved on to
public sector service delivery in for instance the NHS, prisons, police and
schools. Driving privatisation has been the belief that almost anything can be
undertaken more efficiently by the private sector rather than the public
sector. There isn’t space here to discuss what efficiency actually means (lower
service quality, strict adherence to service level agreements, public sector
risk, private sector profits and so forth to name just a few) but one thing
that doesn’t seem to have occurred to anyone to privatise is the collection of uncollected
HMRC tax revenue. Particularly for corporation tax, but also for the highest
earners.
Now this is strange given
that, tens of billions of pounds are going left uncollected by HMRC. So why hasn’t it ever occurred to the Tories to privatise
elements of revenue collection. Well possibly, because the thought of Serco, or
Goldman Sachs, or vulture funds taking Microsoft, Amazon, Starbucks, or
themselves to court is more than George Osborne could stomach – employing large
organisations to protect public sector revenue. After all, privatisation is meant
to be a means to provide commercial opportunities to the private sector – not
to allow the private sector to find ways to regulate the profits of other
private sector organisations.
HMRC privatisation would work
something like this: private sector organisations that could prove they had the
necessary expertise, ability and compliance procedures in place (to adhere to
the necessary confidentiality and data protection procedures) could be licensed
by HMRC to investigate corporate tax avoidance. They could then purchase or be
given a caseload, and any potential tax raised by their investigations would be
shared between them and HMRC. They would receive a proportion of the tax raised
– UK taxpayers’ money – but the flipside is that at the moment, this tax is
likely to go uncollected. Additionally, it would disincentivise tax avoidance,
and therefore increase the overall level of corporation tax raised.
I assume it’s unlikely to
ever emerge from a right wing think-tank as a policy proposal, much less be
proposed by a coalition minister. And of course, you might say that it would be
better to resource HMRC with tax collectors and tax experts. And also, if the
money genuinely is tax avoidance rather than tax evasion, then it will be
unable to be collected. Still, it’s my ‘desert island’ privatisation. It might
actually lead to a few test cases, seeing as HMRC always inevitably agree to settle
rather than take the cases to court and stand up to large organisations. Maybe
Deloitte or Accenture might be willing to use some of their own wealth if they
thought the potential rewards exceeded the risk. And what’s more, unlike PFI,
and many other privatisations, it genuinely would be private sector risk, and
public sector gain.
