UK State Inefficiency Eating Through Tax

September 1, 2009 Taxation in UK  No comments

New research shows that inefficiencies and waste within the United Kingdom’s public sector total almost half of it’s annual personal tax collection.

According to a research paper released by the Center of Economic and Business Research (CEBR) on the 23rd of August, inefficiency on the part of the UK public sector could be valued as high as ?58 billion. The research paper is based on information released quietly by the Office of National (ONS) Statistics on the 14th of August. The ONS information revealed that between 1997 and 2007 the productivity of the public sector in the UK had decreased by 3.4%. This lies in stark contrast to the market sector productivity, which had risen by 27.9%. Further, relative to the market sector, the cost of the public sector productivity had risen 30.5% relative to the market sector. This calculation was based on the General Government Final Consumption Expenditure figure, which does not include capital expenditure and transfer payments. In total this figure came to 250 billion.

Had the public sector been completive in productivity or cost to the market sector, the total spending figure would have been ?58.4 billion less. This is equivalent to the total forecasted annual VAT yield for the UK, or approximately 42% of the national personal tax receipt.

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