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how to motivate paying tax

Some time ago while watching a programme about the lack of funding in rehabilitation groups on the Greek public TV, I started wondering whether there could be more efficient ways to distribute public money to the various organisations that are government-funded. By saying efficient distribution I mean:

--having lower cost per Euro distributed
--use public wisdom and participation
--use more transparency in the process from budgeting all the way to spending
--demonstrate greater accountability and responsibility by the spenders themselves

I came up with a model that could be applied to the majority of the public-funded organisations for their entire budget or on project-basis. Here it comes.

Each organisation prepares their planning and budget and sets it for approval by the local or central government. The plan is published and accounts are created for each activity that requires public funding.

Each citizen can choose and support the organisations they prefer by paying their due taxes directly to the organisations they prefer (well, this could be handled electronically so government keeps track). The citizens could for example support a rehabilitation programme they think is doing great work, the street lighting programme of their neighbourhood, the hospital clinic they need most etc.

Once an account is full the organisation will not accept more funds and the citizens have to pay their tax into other accounts or other organisations.

At the end of the year the responsible person will publish their results that will be attached to next years fund-raising campaign. To stress the need for high productivity in certain organisations the system could allow refunds to be issued to citizens should the programmes they invested in generate profit or deliver under-budget (something like public companies do). This way excellence in project execution and cost effectiveness could be rewarded.

To take participation a step further, the greatest beneficiaries of an organisation could participate in an auditing committee that would assess the results of an organisation.

There are a number of institutions such as hospitals, social care etc that require certain guarantees for their funding but this should be do-able. The negative part is that undermining the central government coordination may have consequences in how well funds are balanced etc.

However, the proposed taxation system is, I think, more promising in countries with significant corruption where a good portion of the tax-payers money is lost in labyrinthine administration structures. These countries typically have a very high cost per Euro administered by the central government (tax collection cost, tax evasion, administration costs, central government costs).

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