The VAT/GST Treatment of Public Bodies by Oskar Henkow

The VAT/GST Treatment of Public Bodies adds a significant amount of force to the developing momentum to question the reasons and appropriateness of major VAT/GST exemptions. We must be grateful that the movement is now taking place particularly—although not exclusively—in the European Union (EU) context. The book under review focuses exclusively on public sector bodies, but one cannot help but think of the other two sectors that are largely VAT exempt in the EU, namely financial services and immovable property. This very timely book consolidates and synthesises a large body of literature without falling into the trap of bibliographical exhaustiveness for exhaustiveness’ sake. Given the analytical framework chosen by Professor Henkow (more on this below), the book covers all the relevant aspects of VAT as it pertains to public bodies. The author adds significant value by presenting a unified and up-to-date discussion of European VAT compensation schemes and by presenting his own views and a conceptual framework for reform. He covers a lot of ground in relatively few pages. Most chapters are short, which helps to make the book very readable. In comparison to similar but edited works, the book gains in cohesion and unity by being sole-authored. In a few pages (11–13) under the heading ‘Purpose and method’, Professor Henkow usefully lays out the approach and framework he uses throughout the book: ‘As this is a legal study of the treatment of public sector bodies in a VAT system, focus is on legal issues arising and these are discussed mainly from a system design point of view’ (11). The rest of the book considers the binary choice of exclusion versus inclusion of public bodies from or in VAT. The starting point of the analysis considers the law as it stands and then relies on comparative legal analysis. I credit the author’s chosen scope in keeping the book to a manageable size—an important consideration for the objective of maximising the dissemination of the work. The author’s methodological choices expose the main weakness of the work: the absence of a systematic consideration of (a) the economic substance behind existing laws and (b) a concrete discussion of economic principles that must be brought forward to redesign VAT laws, directives and regulations. It seems inconceivable to build a benchmark system without economic analysis. To the author’s credit, however, the prior literature contains much discussion of the economic principles that should apply in this area and much of that work appears in the book’s bibliography (191–5). It is important to note that the book also contains an extensive list of official legal references (197–201) and a table of court cases (203–5) that are separate from the bibliography. The back jacket states that the book ‘is sure to be warmly welcomed by practitioners, academics, and policymakers’. I concur but believe that the audience of the book will consist of academics, students of disciplines (law, economics, tax, accounting) with an interest in VAT, policymakers, and practitioners, in that order. Readers who do not hold a vested interest in the present EU system will get most out of this book and its forward-looking conclusions.