I have had an idea that I believe could possibly save the Government many millions of pounds a year. Like many ideas, it is simple, so simple that people may wonder why nobody has considered the pros and cons of it before.
The idea is this – in any part of the public sector, whether that is local councils or the NHS or the police, the public sector authorities spending should be exempt from VAT. In other words the Government should introduce a card that can be swiped through chip n pin terminals everywhere in the country in order to exempt the purchase in question from VAT, for the use of public sector budget holders.
Exempting VAT for the public sector would automatically result in an efficiency saving for the public sector of 17.5%, which is huge. One could argue that if the public sector continued paying VAT this money goes back to the Government anyway, but then you have to take into account inflation, administration costs and the natural entropy of all systems. If the public paid 17.5% tax to the Government, it does not follow that they get that 17.5% tax back in next year’s budget.
I will try to publicise this idea in the coming weeks and start a debate to see what people think.