Regulatory Capture at HMRC?
Recommend on Google+
Is the story of HMRCs failure to collect the right amount of tax from some big businesses an example of regulatory capture? In the current example, the Public Accounts Committee has said that HM Revenue and Customs enjoyed an “unduly cosy” relationship with major companies, and their procedures have allowed rules to be ‘bent’ so that up to £25bn tax has been underpaid. Regulatory capture (an example of government failure) is what happens when regulated industries are able to gain influence over their regulator, so that instead of serving the public interest, the regulator actually supports the interest of the industry concerned. In this case, there does not seem to be one specific industry concerned (although Goldman Sachs’s underpayment of something between £8mn and £20mn comes in for particular criticism); however the situation does seem to meet the requirements defined by the Economist as “Gamekeeper turns poacher or, at least, helps poacher”.
More on the story here:
Taxman slammed over ‘cosy’ business relations
Goldman Sachs tax deal faces UK legal challenge
blog comments powered by Disqus
Jim O’Neill to open the Economics Teacher National Conference 2012 [15 Dec 2011]
Globalisation - Peering into the MIST? [1 Feb 2011]
Apple and Goldman Sachs - Worlds Apart [19 Jan 2011]
AS Economics Revision - Government Failure [18 May 2010]
Regulatory Capture [22 Mar 2010]
Fascinating interview with BRIC creator [8 Oct 2009]
ECONOMICS TEACHER RESOURCE NEWSLETTER
Join over 6,000 other Economics Teachers in the UK and around the world who receive the tutor2u regular Economics Resource Email Newsletter. Get special offers, first news of latest resources, teaching ideas, conferences and workshops + loads of great ideas for teaching economics from our blog authors.
