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Scrap VAT for Public Sector organisations

Comment 10th September 2010

VAT is here to stay and that is a given, rates will change.

Scrap this tax for public sector bodies and all those pseudo organisations that are funded via the public purse.

What will this achieve?

Save on red tape and people resource. It is pointless the Government providing budget then charge VAT on all our services….. yes we can charge it out to those who provide a service but not pay it ourselves. This will save on budgets and allow the people used in running and policing this huge 'silo' to concentrate on other more fundamentally administration needs. Those people resources at the HM Revenue end can focus more resource on finding and catching benefit fraudsters etc.. The largest issue we face today is policing the system. By getting rid of buereaucratic red tape that just pushes wooden dollars around is wasteful.

In Univesities it is easily identified how much income is private and public. Public income should also include grants from research councils etc as it is fundamentally public money. Real private monies raised from the private sector or individuals counts against them to ascertain a %age to be paid on services bills for VAT. eg if a uni has true 20% private funding then they should pay VAT at 20% of the prevailing rate eg if VAT at 20% (Jan2011) then the uni would pay VAT of 4% on all of it's invoices. If a Uni has now private money then it pays no VAT at all. This does not affect the paperwork as companies supplying goods and services would still 'charge' VAT but the user would not pay the VAT just the ex VAT figure….

 

This would save huge amounts of rec tape all over the country and drive out waste in the administration structure.

Why does this matter?

It is important as I detest waste effort in any form of administration or engineering systems. VAT within the public sector and charities for that matter, is a complete nonsense and an overhead that consumes budget and time. In terms of the public purse it is easier, safer and quicker to keep the budget at source than provide it, charge VAT (collected by a company through supply of goods), the private company then has to manage the VAT and pay it back to HMRC. Best not to have provide it to the PS body in the first place.

Waste effort needs to be driven out of all organisations but there is far too much waste effort in most of the public sector. It is something the last few Governments have introduced, especially New Labour. WAste effort is something you can directly control, manage and influence.

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