Tax exemptions for private NHS providers - think the unthinkable?

The possibility of allowing private NHS providers tax exemptions hit the headlines last weekend. Monitor, the economic regulator, is undertaking a review of matters that may be affecting the ability of current and future providers of NHS services to participate fully in improving patient care. One of the matters raised which might prevent private providers from operating on an equal footing with others include corporation tax and VAT. Unlike private companies, currently public sector hospitals do not pay corporation tax and VAT on supplies.

In response on Tuesday Monitor said that it does not intend to provide a running commentary on the review. It says that it has yet to decide what recommendations it will make to the Secretary of State. However in the light of recent media speculation Monitor has decided to clarify the position on one specific issue: that while it is the case that corporation tax is one of many distortions that the review is looking at Monitor will not be recommending that private sector providers should be exempt from paying corporation tax.

This seems to be prejudging the issue in advance of completing the review purely for political reasons. Surely so called independent economic regulators should think the unthinkable; it is then the responsibility of the Government to decide what should be done.

Monitor's review will be sent to Jeremy Hunt in early 2013 and be published shortly afterwards. Mr Hunt will then publish a report to Parliament.

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