Tax and Accountability

Two interesting stories have been doing the rounds on either side of the Atlantic over the last few days.

Both relate to tax. Both relate to the policies adopted by the tax collection authorities.

The UK story is that HMRC (the UK’s revenue and customs service) has been rapped over the knuckles by the Public Accounts Committee for poor levels of customer care. In particular, the Committee takes a dim view of HMRC’s apparent inability to handle calls from tax-payers:

“HMRC is still failing to provide an acceptable service to customers and could not tell us when it would be able to do so. In March 2013, the previous Committee concluded that HMRC had “an abysmal record on customer service”, having only answered 74% of telephone calls received by its contact centres during 2011-12. In 2014-15, HMRC responded to just 72.5% of calls and over the first half of 2015 this had fallen to 50%. The previous Committee considered that HMRC’s target of answering 80% of telephone calls within five minutes was “woefully inadequate and unambitious” and recommended that HMRC should set a more challenging short-term target for call-waiting times and a long-term target that is much closer to industry standards. HMRC has consistently refused to set more demanding targets,however, and in 2014-15 it answered only 39% of calls within five minutes. HMRC did not provide us with any indication of when or by how much its customer service would improve, beyond a vague aim to improve year on year. It acknowledged that people are more likely to pay the right tax when they find HMRC easy to deal with, but, in the words of its own Chief Executive and Permanent Secretary, “we are still struggling”. We are concerned that customer service levels are so bad that they are having an adverse impact on the collection of tax revenues.”

The States-side story is different but related. Apparently a record number of Americans are giving up their citizenship. The main reason for this relates to aggressive tax collection policies adopted by the IRS and aimed at US citizens that live abroad.  Such citizens are getting so fed-up with being hounded for tax – when they derive no services from Uncle Sam – and they are renouncing citizenship as a result.

One of the issues we discuss in our soon-to-be-published paper is that the nature of the ‘contract’ between citizens and government is changing. Part of the reason for this is that there is an expectation on the part of citizens that government needs to know its place in society. It’s no longer more important that any of the other actors in citizens’ lives. Therefore it needs to behave accordingly – adopting a more humble attitude, perhaps.

But there’s clearly a transition period. Government will inevitably shrink as governments continue to grapple with huge debt burdens. But the means of dealing with annoyed citizens who are being squeezed for tax is neither to provide appalling service nor hound people for tax when there’s no reason for them to pay.

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About the Author

Jeffrey Peel
Editor, Citizen20Series and MD, Quadriga Consulting.I am responsible for all site content and have overall responsibility for site editorial, as well as site membership.